June 9, 2008

 

US corn lifts wheat prices up in EU exchange

 

Liffe's European wheat futures climbed higher Friday (June 6, 2008) and set two-weeks-highs, again riding the coattails of stronger CBOT grain and oilseed futures.

 

Paris November milling wheat climbed EUR4, or 2.2 percent, to end at EUR190/tonne with 3,747 lots moved. London November feed wheat rose GBP3.50, or 2.6 percent, to end at GBP140/tonne, with 271 contracts traded.

 

"It's all on the back of corn in America," said a UK-based trader.

 

With such strong gains in corn prices, expectations are that much more wheat will replace corn in feed rations this season.

 

This follows massive corn imports into the EU in 2007-08, which totaled 13.7 million tonnes, with just 3 weeks left in the campaign.

 

The spillover support reversed the downward trend seen since February caused by a bumper crop outlook. Paris November closed EUR6.75/ton higher on the week, it's first move up in five weeks time.

 

"Earlier we had all sellers and no buyers, now we have all buyers and no sellers," added the cash trader. "

 

On Friday F.O. Licht forecast 2008-09 world wheat output will rise by 43.7 million tonnes to a record high of 652 million.

 

This included a rise of 18.3 million tonnes in EU all-wheat output and 5.1 million tonnes in competing neighbour Ukraine.

 

F.O. Licht also projects higher EU output for corn, barley, oats and rye.

 

Still, the report warned low moisture supplies in Northern Germany was "becoming increasingly critical."

 

On the French cash market, standard soft wheat delivered for June was up EUR5 on the day at EUR175/tonne. Wheat for July-December delivery was up EUR2 on the day at EUR183/tonne.

 

Other Liffe agriculture markets were significantly higher. August corn ended up EUR4 at EUR190/tonne with 33 lots moved. In step with the surge in CBOT soys, August rapeseed ended up EUR8.75 at EUR447/tonne with 1,558 contracts traded.