January 12, 2009

European wheat futures climbed on technical trading Friday (January 9) as agricultural commodities rallied.

 

The dollar rose against the euro after job losses in the US were lower than some had expected, making eurozone wheat more competitive on the international market.

 

Paris March milling wheat closed up EUR4, or 2.8 percent, at EUR149 a tonne, with 2,172 lots moved. London May feed wheat ended up GBP2.75, or 2.4 percent, at GBP115/tonne, with 470 lots moved.

 

Brokers were sceptical of the strength of the technical move.

 

"This is an artificial rise on technical trading," said an England-based broker, adding that wheat remains "very sensitive" to what's happening in US markets.

 

"The only business that's going on is a bit of spot wheat (buying) to cover shorts," said the broker.

 

News that grain merchant Frontier is loading 50,000 tonnes of UK feed wheat destined for China has surprised brokers and traders as it's not a traditional trade market for UK feed wheat.

 

A large domestic corn crop should ensure that China has no shortage of animal feed, hence brokers have labelled this deal an "anomaly" in the market, caused by weaker sterling and low freight rates.

 

Logistics out of Black Sea origins are "not that easy" at the moment, causing grain buyers to look elsewhere, said an England-based trader.

 

The US Department of Agriculture is expected to publish figures Monday showing US wheat plantings down by around 4 percent on the year, said brokers.

 

Standard-quality wheat prices in the French cash market delivered at Rouen were up EUR2 on the day at EUR140/tonne.

 

Liffe's Paris March corn traded up EUR4, or 3.1 percent, at EUR130.50/tonne, with 427 lots moved. Paris-based February rapeseed traded up EUR9.25, or 3.2 percent, at EUR295.50/tonne, with 932 lots moved.