EU Grains Close

02/08/11 -- EU grains finished with Nov London wheat down GBP2.50/tonne to GBP161.00/tonne and Nov Paris wheat EUR2.00/tonne lower at EUR195.50/tonne.

A weak euro prevented Paris wheat from falling too much as the Italian authorities called an emergency meeting as bond yields there hit their highest ever in the lifetime of the single currency.

The spotlight is also focusing on Spain, the size of whom's national economy is greater than that of Ireland, Greece and Portugal combined. Considering the uproar in bailing out these three relative minnows imagine the furore if one of the big fish start to flounder.

The US are expected to vote through their last gasp raising of the debt ceiling this afternoon, but as with Europe it seems like a temporary quick-fix rather than a long-term solution.

These outside factors are keeping market participants very nervous and appear to be having as large an influence on price direction as the grain fundamentals.

Whilst we have potential corn, and to a lesser degree wheat and soybean production challenges in the US, not all the market fundamentals are bullish.

European crops appear to have fared better with the dry spring and early summer than many expected, and the Black Sea is of course re-flexing it's muscles on the international export arena.