September 11, 2009
EU wheat mixed, relentless; bearish news weighs
European wheat futures traded mixed Thursday (September 10) with no change to the market's bearish outlook.
The market is suffering from constant negative news for prices, including a huge crop and low demand, said a London-based fund manager.
November Paris milling wheat futures traded down EUR0.25, or 0.2 percent, to EUR121.25 a tonne, with 4,885 lots moved. London May feed wheat closed up GBP0.25, or 0.3 percent, at GBP99.25/tonne, with 178 lots moved.
Some European countries are becoming concerned that prices could soon reach intervention levels which are set at just above EUR100/tonne.
The French, German and Polish governments are putting pressure on the European Commission to introduce an export refund to boost returns for farmers, said a Switzerland-based analyst.
However, the Commission is unlikely to make such a move, the analyst said.
Intervention prices are attractive to farmers in the south of Germany but prices would have to weaken a further EUR10/ton for farmers in the north to also become interested, said a Germany-based broker.
Even if prices fall to intervention levels before Nov. 1, when intervention becomes available, brokers do not expect farmers to sell into intervention immediately.
"We won't see an enormous influx in the beginning of the campaign; everybody will wait and hope there's some new crop disaster to lift prices," said the Switzerland-based analyst.
The analyst estimates between 1 million and 2 million tonnes of wheat will go into intervention by May if prices fall to intervention levels.
Lower prices are also expected to impact winter wheat planting decisions as some farmers may decide it's uneconomical to plant on poor land.
Standard-quality wheat prices in the French cash market delivered at Rouen were unchanged from Wednesday at EUR114/ton.
Paris-based November rapeseed traded down EUR1.25, or 0.5 percent, to EUR262.50/tonne, with 2,293 lots moved. Liffe's Paris November corn traded down EUR0.25, or 0.2 percent, to EUR119.00/tonne, with 937 lots moved.
