August 27, 2007

 

EU wheat futures: Flat to lower, takes breather after recent surge
 

 

European wheat futures traded on Liffe finished steady to slightly lower Friday (Aug 24), with the market taking a breathier following Thursday's surge to record highs.

 

"We needed to correct a bit, but volumes are very light," said a Paris-based broker. But "wheat supplies are so tight, prices should remain stable."

 

Paris-based November milling wheat ended unchanged on the day at EUR236.50/tonne with 1,053 lots moved. London-based November feed wheat ended down GBP0.25 at GBP158.75/tonne with 221 lots traded.

 

This week alone, gains tallied EUR9.50/tonne in Paris November and GBP8.25/tonne. On Thursday, record highs were set in the Paris November contract at EUR241.50/tonne and in London November at GBP162/tonne.

 

"One way or another, there is not enough wheat for every based on the consumption we are seeing right now," said a Paris-based trader.

 

Many have been questioning if the top is in the market yet. The trader said this would depend on proof of a stable crop in the southern hemisphere versus current estimates, signs of rationing demand, and proof of larger seedings for next season as well as favourable seeding conditions.

 

Many will be watching to see how much wheat India ends up buying with its tender set to close later this month. What they decide to do will be a sign if demand is being ratcheted down or not, the trader said.

 

Because of this summer's lack of heat, harvesting of the French corn crop will be delayed. In addition to having to wait for the additional grain supplies, the late harvest could reduce seeding options for next year's crops.

 

Overly wet conditions are already starting to delay some early sowing of the rapeseed crop, but the trader said there is a large period of time left to get things planted.

 

But not all of the 2007 European Union wheat crop is out yet. Rains delayed the remaining UK harvest this week, but warmer and drier weather is forecast for the weekend.

 

French standard cash wheat delivered to the main port of Rouen was down EUR4.50 from Thursday's high to mostly about EUR233/tonne for nearby to December delivery.

 

UK delivered bread wheat prices ended the week up GBP7-10/tonne and feed wheat up GBP9.50-11/tonne.

 

In other Liffe agricultural markets, Paris-based November corn dropped back from Thursday's rally, ending down EUR4 at EUR230/tonne with 47 lots moved. November rapeseed ended up EUR1.50 at EUR333.50/tonne with 265 lots moved.

 

EUR1=US$1.3666 (Aug 27)

GBP1= US$2.0170 (Aug 27)