EU Wheat Ends Mixed, Mostly Lower

08/02/11 -- EU wheat futures closed mixed Tuesday with Mar London wheat down GBP0.50 to GBP206.00/tonne, and Nov up GBP0.50 to GBP178.00/tonne. Paris wheat closed with Mar down EUR1.75 to EUR27.00/tonne and Nov falling EUR0.25 to EUR241.50/tonne.

Although old crop London wheat fell, new crop Nov11 and "only a twinkle in it's Daddy's eye" Nov12 both posted their highest closes ever in the lifetime of their respective contracts.

It seems like the European wheat market isn't quite sure what to make of itself right at the moment. We know that stocks are tight, and getting tighter by the minute. We know that we don't really need to compete for every last export order out there, yet we're disappointed when we miss one.

We've missed two or three already this week as Jordan today became the latest in a throng of Middle Eastern nations salivating to sign on the dotted line, booking 100,000 MT of US wheat.

We missed out on Egypt's business over the weekend too, and the signs are not good for a strong showing amongst a raft of other tenders kicking around this week. Smaller sales are obviously ongoing and we shall find out how things have progressed when Brussels announce the volume of this week's soft wheat export licences on Thursday night.

Drought in China was the latest catalyst to put a light under the US market, which rose to a 2 1/2 year high this afternoon. Although not a new story, it an ongoing one that seems to be showing few signs of breaking.

The major wheat growing province of Shandong has apparently seen only 12 millimeters of rain since last September, fifteen percent of normal levels. This however is a recurring annual theme in the grain markets, they always seem to be suffering the worst drought in 50, 60 or 100 years but rarely emerge as a significant importer of wheat or corn.

Maybe things are the year? It's hard to say. Various weather forecasts today refer to a "critical situation" for Chinese wheat and "important moisture on the way" by the end of next week.