November 23, 2010

EU feed wheat outpaces milling wheat

Feed wheat traded in London has increased faster than milling wheat listed in Paris due to higher demand for livestock fodder.

Since end-June, the most-active feed-wheat contract has risen by 63%. Thus, beating the 55% gain for milling wheat. The UK exported 854,000 tonnes of feed wheat from July through September, a 94% increment from the previous year, an analyst said.

Shippers exported 386,000 tonnes of feed wheat in September, which was "as near to capacity for UK exports as you can get on a monthly basis," the analyst added. Continuous demand for livestock feed may result in feed-wheat shortages throughout the marketing year ending June 30, he said.

"We were cheap compared to the French and had good quality, so that added up to a strong period for us," the analyst said. "October and November have been busy months as well, so you could see a strong second half of the season for us."

Feed wheat for November delivery in London increased by 1.6% in the previous week to GBP165.90 (US$264.40) per tonne. The May contract, the most active by open interest, rose by 2.2% and added 0.4% to GBP175 pounds (US$278.90) on Monday (Nov 22)

Milling wheat for January delivery, the most-active contract, declined by 0.2% in the previous week and fell by 0.2% to EUR211.50 (US$287.29) per tonne yesterday.