May 11, 2010

EU wheat price eases as the euro rebounds

EU wheat prices eased slightly and Chicago wheat futures fell sharply on Monday (May 10) as the euro rebounded against the dollar after policy makers announced a US$1-trillion package to stabilise the currency.

Volumes were light in Paris as operators were cautious ahead of Tuesday's monthly crop report from USDA that will give first estimates for this year's US wheat production and 2010/11 ending stocks for wheat, corn and soy.

"The much awaited report is likely to act as a starting point for the new season with a backdrop of well supplied wheat but tighter feed grain markets," Britain's Home-Grown Cereals Authority said.

Benchmark November milling wheat was down to EUR140.50 (US$178.55) a tonne by 4:19 p.m. Chicago wheat futures also fell in early trade on concerns about plentiful supplies.

May milling wheat, the last-remaining old-crop contract, was down to EUR131 (US$166.40) a tonne ahead of its expiry at the end of Monday's session.

Export activity also continued to support wheat prices, with latest customs data confirming the healthy trend in recent months.

French exports were also being helped by a wave of shipments to Morocco ahead of a seasonal hike in the country's import tariffs from June.

Spanish wheat prices have given back last week's gains due to a recovery by the euro making imports from key suppliers France and Britain less expensive, with additional downside from a trickle of domestic old crop finding its way on to the market.

Traders said volume was thin while buyers awaited direction. A shortage of wheat in port warehouses was propping up prices, but many feed makers were reported to be short for June, because they expect prices to fall due to forecasts of good harvests at home and abroad.

Traders saw limited buying interest in the Dutch market, which they expected to pressure prices.