June 15, 2007

 

Tight supplies push EU wheat prices to new highs

 

 

European Union wheat prices has reached record highs on Thursday, brought about by concerns of global supply tightness and helped by an expected strong opening by US futures, traders said.

 

Main wheat futures contracts in Europe at 1420 GMT:

 

                        Euronext - Paris        LIFFE - London

                             (Euros)                     (Stg)

 NOV                  180.00 (+6.0)          115.00 (+4.5)

 JAN                   180.00 (+5.5)          115.25 (+3.25)

 

French wheat futures hit new historic highs at the opening, powered by a surge in US wheat futures to new 11-year highs the previous day and by a new cut in estimates by French analyst Strategie Grains for the European Union's 2007 grain harvest.

 

By 1420 GMT new crop futures on Euronext milling wheat futures were up between 3.00 and 6.00 euros.

 

Benchmark November was up 6.00 euros at 180.00 euros after hitting a high of 181.00 euros, a level not seen since the launch of the futures contracts in 1998.

 

A trader said wheat market has been irrational following the speculation on US markets after the November contract hit the psychological level of 180 euros.

 

French futures are now far above the highs reached in late 2003 after severe drought badly damaged European crops.

 

In the UK, feed wheat futures rose to their highest in around 3-1/2 years, boosted by sharp gains in US and French markets, dealers said.

 

Most active November rose to a contract peak of 115.00 pounds a tonne, the highest for the second position since December 2003 and up 4.50 pounds or 4.1 percent.

 

Dealers said farmer selling remained very slow with many expecting prices to rise further.

 

Volume at mid-afternoon was a heavy 902 lots.

 

In Germany, prices also rose sharply following the increases in Paris and Chicago.

 

New crop standard bread wheat for September delivery in Hamburg was offered in late trade at 180 euros a tonne, up five euros on the day, with buyers at 178 euros.

 

One trader said the sudden rise generated a considerable amount of farmer selling with some producers to simply cash in on these price levels.

 

Standard wheat for Hamburg delivery in September traded in a wide range from 173 to 180, traders said.

 

In Italy, wheat prices also rose but few deals were done due to scarce offers as most operators have postponed new crop deals in anticipation of a good price.

 

Millers had previously delayed purchases hoping that prices would fall have now allowed selling their crop, traders said.  They added there is no national old crop grain on offer and millers have to buy foreign grain.

 

Traders cited new trade movements will occur after recent rains.