May 11, 2010

European crop prices have firmed over the past week due to supply shortage in the market.

Strikes and port congestion in France have hindered the movement of grain and some business has been switched to the UK.

China has been buying US corn recently, for the first time in four years. In global terms, the expected volume (up to 2 million tonnes) is not consequential in the context of ample stocks and brisk US planting though helpful for market sentiment.

The continuing discussion on securing a rescue package for Greece has resulted in volatile currency movements over the past week. The fear that the Greek problem is just the start of what may be a wider Euro Zone debt crisis - with Spain and Portugal reported as being next in line - has meant that the euro has weakened versus the US dollar in particular. This is generally supportive for European grain prices and, with discussions continuing, further volatility is expected.

New crop wheat has moved significantly up, and then down again, as the firmness in the old crop market spilled over into new crop. Technical trading around the old crop futures markets in Paris and London has also been a factor.

Rain is expected across most of Western Europe in the next few days. This is needed in some areas and will surely improve crop prospects.

Grain markets remain active and fast moving with all sorts of influences evident. Conditions such as these often present good selling opportunities and therefore it is well worth keeping one eye on prices at present.