December 14, 2009

 

 

European wheat futures traded mixed Friday (December 11) in quiet markets.

 

There is no consumer interest, and the London market came under pressure from strengthening sterling, said a UK-based broker.

 

March Paris milling wheat traded up EUR0.75, or 0.6%, at EUR131.00 a tonne, with 2,460 lots moved. London May feed wheat traded down GBP0.25, or 0.2%, at GBP110.00/tonne, with 37 lots moved.

 

While the market continues to have a bearish tone due to surplus wheat, any weather issue, or other type of supply shock, could "illicit a reaction from the market," said the broker.

 

Gains in recent months have been driven by an influx of index-fund money which saw prices become overdone considering large world wheat stocks, said Rabobank in its monthly commodities report.

 

However, looking forward, there are indications for potential upside in wheat prices, mainly driven by outside markets.

 

The tightening supply/demand outlook for corn through 2010 could see strength in corn markets spill over to support wheat prices, while strengthening rice markets could help to lift the floor for global milling wheat prices as consumers substitute rice for other grains, said Rabobank.

 

The grain complex has been a weak performer in the commodities complex in 2009, however some analysts believe this could change next year.

 

"Prices in many parts of the agricultural complex are trading at, or below, their long-run historical averages in real terms," said Deutsche Bank in a commodities note published Friday.

 

"We believe this cheap valuation of the agricultural sector is inconsistent with bullish fundamentals across the complex," said the bank.

 

Standard-quality wheat prices in the French cash market delivered at Rouen were unchanged from Thursday's prices at EUR118/tonne.

 

Paris-based February rapeseed traded up EUR1.75, or 0.6%, at EUR282.00/tonne, with 1,783 lots moved. Liffe's Paris January corn traded up EUR1.00, or 0.8%, at EUR132.50/tonne, with 108 lots moved.