June 12, 2008

 

US weather concerns making impact on EU wheat trading

  
 

Liffe's Paris November milling finished 6.6 percent higher Wednesday (June 11, 2008), expanding gains late session, as nearby CBOT corn rose above US$7 a bushel for the first time ever.

 

Unfavourable wet weather in key US corn growing belt continues to threaten area and yields. Additional tightness of corn supplies is expected to spur more feed demand for wheat.

 

Paris November milling wheat climbed EUR12.75, or 6.6 percent, to end at EUR205 a tonne with 6,436 lots moved. Just before the close, November struck a near two-month high of EUR205.25/tonne.

 

London November feed wheat rose GBP8, or 5.7 percent, to end at a near two-month high of GBP149/tonne with 266 lots moved.

 

Liffe's Paris-based corn and rapeseed futures also posted hefty gains. August corn jumped EUR16, or 8.2 percent, to close at EUR210/tonne with 182 lots moved. August rapeseed ended up EUR10.50, or 2.3 percent, at EUR459.25/tonne with 884 contracts traded.

 

"Nobody wants to sell because they don't know what is going to happen next," said a Paris-based dealer. "Everyone is very nervous."

 

At the CBOT, nearby corn, soy and wheat all at least touched their daily trading limit highs.

 

The concerns in the US have altered the bearish perception of this season's projections for a record-large global crop, to which a bumper European crop is expected to contribute greatly.

 

Already, projections call for a sharp drop from the large imports of corn and sorghum imported into the EU in 2007-08. On Tuesday the USDA forecast EU imports of corn would drop 36 percent to 7 million tonnes.

 

"The crop looks fine," added the dealer. "In northern parts of France they are afraid of disease, but the crop isn't ripe."

 

In southern France, the durum crop is estimated to about two weeks from harvest, but overall cutting is seen behind normal following this season's cool temperatures. The extended growing period is expected to increase yields but potentially lower protein.

 

In northern and eastern Germany and in Poland, plants are struggling from dryness. Yields are expected to be reduced from the stress, but crops "are not terrible," said the dealer.