May 23, 2012

Weather boosts world wheat price up

As global weather events focused the minds of international grain traders on grain supply and demand, world wheat prices moved upwards last week.

Despite increasing turmoil in financial markets, wheat prices staged a significant recovery, according to Fintan Conway of the IFA grain committee.

November futures prices for milling wheat on the Paris MATIF rose by EUR20 (US$25) per tonne last week, from Monday's low of EUR194.25 (US$246.18) per tonne to Friday's price of EUR215 (US$272) per tonne.

"Weather events particularly across the northern hemisphere and their potential impact on crop yields have refocused minds on market fundamentals of supply and demand," said Conway.

"European prices have also benefited from a much weaker euro."

In the US, wheat futures rose on the back of forecasts for continuing dry weather and higher than normal temperatures in the southern half right through until August.

Similarly, dry weather is affecting crop development across Russia and the Black Sea region, while in the southern hemisphere, it is delaying Australian winter wheat sowings.

Private analysts are talking down the Russian harvest by two million tonnes to three million tonnes, according to Conway.

Meanwhile, EU wheat production was revised down by four million tonnes this month on top of a 4.3 million tonne write down last month. This would represent a 5% drop on last season's production.