February 11, 2008

 

High wheat prices bring up futures in Africa and France to near records

 

 

CBOT wheat futures, which hit a record last week, is bringing wheat futures in France and Africa to near record highs as well.

 

Paris milling wheat climbed 4.2 percent Friday, and just before the close edged within EUR3.50 a tonne of its all-time-high of EUR285/tonne as the USDA announced that US wheat stocks for 2007/08 would be near 60-year lows last week.

 

Concerns over global supply tightness swelled as all three US wheat exchanges again traded up the US$0.30 daily limit to set fresh record highs.

 

Liffe March milling wheat ended up EUR11.25, or 4.2 percent, at EUR280.50/ton with 3,506 lots moved. May climbed EUR11.50, or 4.3 percent, to end at EUR280/ton with 6,388 lots moved.

 

May also started to threaten the all-time-high in the second-month continuation charts, set back in September at EUR300/tonne. May finished the week up EUR33.50/tonne.

 

New crop contracts saw more limited gains, with November ending up EUR6, or 2.6 percent, at EUR239/ton with 4,452 lots moved.

 

Volumes were strong, but failed to match the record levels posted Wednesday.

 

Another French dealer said physical traders are now afraid to hold positions due to the extreme volatility in the futures market.

 

For French traders the question is now measuring how much of the remaining supplies are of milling quality and that which can only be used for feed.

 

"France has wheat to sell, but its not such a huge volume," said the trader and added that most of the western half of France is now sold out.

 

But the wheat that still is available for use this season will very likely come to market, as current spreads are making it too expensive to carry over, the trader said.

 

And despite high milling wheat prices, lower quality feed wheat has been unable to be utilized as corn is currently about EUR75/tonne cheaper to feed.

 

Highlighting this fact, London feed wheat futures again trailed the gains on the Paris milling wheat market. May feed wheat closed up GBP4, or 2.1 percent, at EUR192/ton with 292 lots moved. New crop November closed up just GBP0.50 at GBP155.50/ton.

 

On the cash market midday, French standard wheat in Rouen was up EUR4/tonne on the day at EUR267/tonne for February-April, well up from about EUR240/tonne late last week.

 

UK feed wheat was up between GBP6/tonne-GBP12.50/tonne.

 

Paris June corn ended up EUR2.50, or 1.2 percent, at EUR205/ton with 409 lots moved. Paris May rapeseed ended up EUR4, or 0.9 percent, at EUR449.50/ton with 806 lots moved.

 

Meanwhile, South African wheat futures rose by the extended daily limit to another record high Friday.

 

The most active wheat for March delivery contract surged by 65 rand to 3,806 rand a tonne, according to I-Net Bridge data.

 

"The fundamentals for the wheat market are very strong and with the rand staying weak and the demand for the grain outstripping supply everywhere, we can reach the 4,000 rand per tonne level," a Free State-based trader said.

 

The wheat market is on a buying frenzy, having collected more than 400 rand so far this month as poor weather conditions threaten crop failures in the world's top wheat exporters.

 

South Africa is due to produce 1.82 million tonnes of wheat this season, about 1.20 million tonnes short of annual local demand.

 

South African corn ended mixed with nearby contracts ending barely changed, while the new July crop contract rallied following rises in after-hours Chicago Board of Trade electronic trading, traders said.

 

March white corn ended six rand higher at 1,753 rand a tonne and July white corn climbed 41 rand to 1,580 rand.

 

The trader said July white corn was following the currency and CBOT corn prices, and that it was about 100 rand below export parity price - suggesting that there was room for another upside move in the coming days.

 

Shortly before the local grain market closed, the rand was bid at 7.72 rand to the dollar, the weakest level in 15 months.

 

US$1=7.802 rand (Feb 11,2008)