February 9, 2009
EU Wheat: Rises, buyers look to tempt farmers back to market
European wheat futures traded slightly higher Friday (February 6), with big trade house exporters particularly active in the market.
"International trade companies have been doing a lot of price fixing today" in anticipation of more exports, a Paris-based broker said.
March Paris milling wheat ended up EUR1.25, or 0.8%, at EUR150.00 a metric ton, with 3,392 lots moved. May London feed wheat closed up GBP0.90, or 0.8%, at GBP118.40/ton, with 116 lots moved.
Big exporters are prepared to pay higher prices to encourage farmers back to the market, said a German-based broker. "Today we have high demand so buyers have to pay a premium."
"Farmers' are unwilling to sell any lower," he said.
European wheat's gains were capped by profit-taking in the US, putting downward pressure on international markets.
Brokers said Egypt is likely to tender for wheat next week and French wheat should be competitive on the international market to pick up fresh export business.
Weather and disease concerns in multiple countries are underpinning prices, brokers said.
"Continuing dryness in US wheat area and China (is) sufficient to increase speculative buying," said UK farmer-owned cooperative Openfield.
China's Ministry of Agriculture has also warned a wheat rust disease, puccinia striiformis, could cause large losses to its crop if not carefully controlled.
And after rain throughout the week brought relief to stressed corn and soybean growing regions in Argentina, dry weather is again forecast, T-Storm Weather said.
"Rain would still be helpful (even) after widespread rainfall over the last seven days in key growing areas," the forecaster said. "A hot and dry pattern similar to the one experience for much of December and January returns for at least five days - and possibly longer."
The strength of corn and soybean prices has spilled over to wheat markets, although the rain this week was bearish for markets.
Standard-quality wheat prices in the French cash market delivered at Rouen were unavailable.
Liffe's Paris March corn traded up EUR1.50, or 1.1 percent, at EUR138.50/tonne, with 322 lots moved. Paris-based May rapeseed traded up EUR1.75, or 0.6 percent, at EUR286.00/tonne, with 2,128 lots moved.
