July 16, 2012


EU wheat prices up as crop outlooks drop



Western Europe's wheat prices jumped on Friday (July 13) with a deteriorating outlook for Black Sea region crops giving added momentum to a rally bolstered by the worst drought in the US Midwest since 1988.


"We are seeing intensified concern about crops in the Black Sea region and west Europe being added to the impact of the US drought," one German trader said. "The market has this week received constant flow of reports about disappointing harvest prospects in Russia and Ukraine."


"Kazakhstan is not gaining much attention but also seems to be suffering extremely badly and talk is the country could be almost out of the export market. If the US and Black Sea take a smaller export market share, attention will turn to west Europe," the trader added.


November milling wheat in Paris rose as much as 2.65% to EUR261 (US$319) a tonne, a contract high and the highest level in more than a year for a benchmark contract. By 1147 GMT the contract was up EUR5.25 (US$6.42) or 2.06% at EUR259.50 (US$318).


US corn and soy futures rose on Friday (July 13) with little relief expected for crops which have been hit by the worst drought since 1988, while wheat prices also advanced. Dealers said persistent rains in Western Europe had also helped to amplify crop concerns.


"We're in a market context where there's a shortfall in feed grain with corn, a shortfall in protein with soy and now with the weather in Europe we could have too much feed wheat and a milling wheat problem," a French grain trader said.


In France, rain continued to hamper harvesting and stoke fears of quality damage. Worries were focused on the west coast, where early harvesting usually provides exports for the start of the season.


A growing line-up of scheduled loadings at the Atlantic port of La Pallice was notably raising fears of logistical snags. More showers were forecast in western and northern grain belts on Friday (July 13) and this weekend before conditions were expected to become drier and warmer early next week, forecaster Meteo France said.


Operators also cited concern about hot weather damaging crops in eastern European producers like Romania and Bulgaria.


Feed wheat futures in Britain also rose with November up GBP2.25 (US$3.50) or 1.2% at GBP188 (US$293) a tonne after setting a contract high of GBP189.50 (US$295).


Wheat planting in Britain rose 2% to the highest level since 2008, the Home-Grown Cereals Authority said on Friday (July 13) issuing results of a survey of crops to be harvested this year.


In Germany, prices also rose with standard milling wheat for September delivery in Hamburg offered for sale up EUR7 (US$8.57) on late Thursday (July 12) levels at EUR265 (US$324) a tonne, with buyers at around EUR263 (US$322).


Animal feed producers were again being compelled to pay heavily for old crop German feed wheat. German feed wheat for nearby delivery in the South Oldenburg animal feed grains market near the Netherlands was again quoted over milling wheat, offered for sale up EUR4 (US$5) at EUR265 (US$324) a tonne for nearby delivery, with buyers at around EUR262 (US$321).

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