April 24, 2006

 

Europe cash wheat firmer on increased feed demand

 

 

European cash wheat prices were generally firmer Friday (Apr 21) spurred by continued demand from domestic feed compounders.

 

"It's been difficult to get feed wheat," said a German trader.

 

In Germany in the key feed wheat market of South Oldenburg, bids stood at EUR127.50/tonne, spot basis with offers at EUR128.00/tonne. This was up from EUR124.00-EUR125.00/tonne earlier in the week.

 

German bread quality wheat is being sold for feed purposes or feed wheat prices would be even higher, the trader added.

 

German B-quality wheat delivered to Hamburg in the spot market was also higher, at EUR116.00/tonne. This was up from EUR114.00/tonne earlier in the week.

 

In France prices held onto gains achieved earlier in the week. French spot standard wheat, basis Rouen, was steady to EUR0.50 higher Friday at EUR105.00/tonne.

 

Cooperatives continue to buy back wheat sold for future delivery in Rouen and then selling that wheat to feed compounders in the Netherlands, Belgium and northern Italy.

 

Continued flooding on the Danube River has also cut off barges from bringing wheat over from eastern Europe.

 

Support this week also stemmed from ideas that the European Union grain management committee would offer restitution in this week's grain tender. This sentiment was confirmed Thursday when 105,000 tonnes of free-market export licenses were granted for a maximum refund of EUR5.00/tonne.

 

Still, many traders said the restitution was warranted due to this week's strength in the euro against the dollar.

 

Some of the strength in feed wheat has also caused both French corn cash and futures prices to rise. French June corn was up EUR1.75 late Friday at EUR132.25/tonne, with 435 lots moved.

 

Feed wheat prices in the UK were generally about GBP1.50/tonne to GBP2.00/tonne higher this week, depending on the area.

 

A UK trader said buyers had grown lackadaisical in making purchases as many had been used to a surplus of cheap grain. Most buyers had also been anticipating a larger drop in feed demand because of bird flu.

 

The trader said some grain needs in the western areas are being covered with grain out of the east.

 

Futures prices were steady to slightly lower following Thursday's gains. French May milling wheat was down EUR0.25 late Friday at EUR114.00/tonne with 183 lots traded. London May feed wheat settled flat at GBP73.25/tonne.