April 8, 2008

EU wheat prices to take lead from US

EU wheat now takes its main lead from the US, as US wheat markets are substantially driven by the volume of outside financial investment in commodities, an analyst said.

In March, EU wheat prices slumped on lack of export sales and favourable harvest outlook.

Investment funds, which are influenced by external financial markets, look set, however, to remain major players particularly in US wheat futures.

Paris May wheat futures, the benchmark for most other European wheat markets, fell from around EUR272 (US$428) a tonne on March 25 to a low point of around EUR216 (US$340) on April 1 and is now hovering around EUR241 (US$380).

One German analyst said that the price fall was probably due to increased attention on fundamental export and harvest outlook factors.

The analyst said that the EU wheat will now take its lead from the US.

US markets are influenced by outside factors such as the sub-prime crisis, oil prices and other economic news. This means European prices are also indirectly including these factors in their price building and these financial influences are now permanently in the markets, the analyst added.

Another analyst added that the EU wheat is now firmly part of the daily global commodity market price movement pattern.