March 23, 2009
EU wheat prices depressed by bearish fundamentals
The EU wheat futures are expected to continue to come under pressure from the combination of a weakening dollar, falling demand and rising stock levels, Francis Mordaunt, head of business research at UK farm consultancy Andersons said Friday (Mar 20).
"Although 2009 crop sizes are lower, the usage/demand outlook keeps deteriorating, while ending stocks keep being revised up - this is definitely having a depressing effect on futures prices," said Mordaunt.
Over the past two months, Paris milling wheat futures May contract has seen around 9 percent shaved off its value, while London's May feed wheat futures' values have fallen by around 6 percent.
EU wheat exports totalled 15.87 million tonnes as of March 17 and are likely to be minimal in the remainder of the 2008-09 marketing year (July-June), as the region struggles to compete with other countries, said Mordaunt.
"Earlier in the season, UK wheat was more competitive," said Mordaunt. "We got rid of a big exportable surplus and prices have been held up by a weak pound."
Demand for feed grains, including corn, wheat and barley, is particularly suffering in the global economic slowdown due to "slackening demand for meat and dairy products," said Mordaunt.
