March 3, 2008

 

EU wheat futures fall on wild swings of US grain market

 

 

Liffe European wheat futures fell Friday (February 29, 2008) on profit-taking directed by the US wheat market.

 

However, a sale of French wheat to Egypt provided underlying support to help limit losses.

 

Paris May milling wheat ended down EUR3, or 1.1 percent, at EUR278 a tonne with 2,912 lots moved. London May feed wheat fell GBP0.50, or 0.3 percent, to end at GBP192/tonne with 148 contracts traded.

 

European losses were limited by comparison to the US wheat market, as European trader have become extra cautious amid the sharp US swings.

 

At the time of close in the European markets, the Chicago May wheat contract was a down a hefty 4.5 percent, or US$0.53, at US$11.12 a bushel. This is down from the week's high of US$13.49 1/2 a bushel.

 

"This is by no means over, but it needs to calm down," said the broker adding that many European traders have moved to the sidelines amid the US volatility.

 

On Friday (February 29, 2008), Egypt's main state buyer, the General Authority of Supply Commodities, bought 120,000 tonnes of French wheat.

 

This is the first time GASC purchased French wheat in more than a year, according to trade sources. The deal comes after GASC altered its wheat import specifications, which was aimed at allowing more wheat to be offered up in the tenders.

 

Nobody was surprised by the purchase, said a European grain trader, adding that the wheat was offered at a cheap prices. And the French wheat is expected to come with discounts for lower quality allowances.

 

EU wheat exports have improved since the start of the year. Weekly EU data showed license to export soft wheat rose 226,000 tonnes, making the EU a net export of 501,000 tonnes at 35 weeks into the 2007-08 campaign.

 

The EU is traditionally a much larger net wheat exporter, but after a slow sales start was a net importer until early February.