July 16, 2010

Germany buys 40,000 tonnes UK feed wheat

About 40,000-50,000 tonnes of British feed wheat has been sold to Germany in the last two days as UK wheat merchants seek to benefit from higher German prices, German traders said on Thursday (Jul 15).

Trades were said to have been made on Wednesday (Jul 14) and Thursday for delivery between the second half of September and first half of October to the South Oldenburg market in north Germany, a centre for purchasing by animal feed makers.

"London wheat futures were on Thursday about EUR19-20 (US$24-US$25) a tonne cheaper than South Oldenburg prices which have opened a sales window," one German trader said. "The British seem to be taking advantage of attractive German prices."

British feed wheat is regularly sold to Germany but traders said the current trades were unusual with Germany's own wheat harvest set to start in only around two weeks.

South Oldenburg feed wheat was traded at between EUR173-175 (US$220-US$222) a tonne for September/December delivery on Thursday, with prices rising because of concerns about harvest damage in Germany.

British wheat was traded at EUR161 (US$205) a tonne C&F to the German North Sea port of Brake, traders said. With the addition of about EUR12 (US$15) trucking costs in Germany, this meant British wheat was effectively sold at around EUR173 (US$220) a tonne delivered to South Oldenburg.

London's November feed wheat <LWBX0> contract ranged around GBP131 (US$199) on Thursday, giving a euro price of around EUR156 (US$198) a tonne, a trader said. "This sort of window is enough to get British deals done in Germany."