September 21, 2010

London feed wheat at record high in almost three years

Europe's feed wheat futures rose to the highest level in nearly 2-1/2 years on the front month on Monday (Sep 20), boosted by a corn-led rally across grain markets and the weakness of sterling, dealers said.

November feed wheat <LWBc1> rose GBP5.75 or 3.5% to a peak of GBP171.50, the highest level for the front month since April 2008.

"Sterling is a bit weaker but it is really the US-led charge by the corn market that is allowing all wheat prices to go up," one London dealer said.

Corn prices on the CBOT rose to a two-year top on Monday (Sep 20), buoyed by worries about US yields.

Dealers said a weaker pound could also provide a boost from already strong demand in the export market. Most UK wheat exports are shipped to customers in the eurozone, particularly Spain and the Netherlands.

The euro rose to a seven-week high against sterling on Monday (Sep 20).

"The market is naturally strong because the demand for our exportable surplus has been very high," one dealer said.