June 6, 2007

 

EU wheat rises to new highs as crop prospects dim

 

 

Wheat prices in the European Union were sharply higher on Tuesday (June 5) with the increase driven by diminished crop prospects in the Black Sea region, traders said.

 

Paris milling wheat futures and London feed wheat futures has established fresh contract highs on June 5 with an anticipated Ukraine ban on grain exports contributing to the bullish mood.

 

Ukraine has called for an "urgent" drafting of a resolution Monday (June 4) to introduce a ban on grain exports pending the formation of proper grain reserves, hit by a severe drought in the region.

 

A sharp early advance in Chicago Board Of Trade (CBOT) wheat futures further fuelled the market's advance.

 

New crop benchmark November was at 166.00 euros a tonne, up 3.25 euros on the day, after briefly hitting a new contract high of 166.50 euros a tonne earlier in the afternoon.

 

These were the highest prices reached on the second position of the French wheat futures market since October 2006.

 

A trader said, world harvests are now depending on weather as yields shrink daily and consumers becoming wary, referring to Maghreb countries, including Algeria and Morocco, as well as Egypt and the Arab emirates.

 

Romania became the latest eastern European country to detail major crop losses on Tuesday with the agriculture ministry estimating this year's production at a four-year-low of 2.9 million tonnes.

 

In Germany, wheat prices rose again largely on anticipation that Ukraine will introduce grain export restrictions in coming weeks, substantially increasing export opportunities for German and French wheat in key Middle Eastern markets.

 

In Spain attention is focused on the new crop, which is expected to be good after a mild, wet winter and spring.

 

The spot feed wheat price has toned down this week and it was quoted at around 176.7 euros a tonne in major ports, down from 184 euros at the end of last week, but traders said very little business was being done.

 

New crop feed wheat was quoted at 168 euros a tonne in port for September to December, less than the indicated price of 10 euros on Friday, a trader said.

 

New crop barley was offered at 157 euros a tonne at the factory gate in producing areas, but there were few buyers.

 

Latest figures show Spanish grain traders' association forecasts bumper wheat and barley crops this year, with soft wheat weighing in at 5.3 million tonnes and barley at 11.5 million tonnes.

 

The figures are more optimistic than Spain's Agriculture Ministry, which point to soft wheat crop hitting 4.6 million tonnes, up 14.2 percent on last year, and barley 9.7 million tonnes, up 16 percent.