August 5, 2008

   

EU wheat prices fall as low quality wheat floods market

EU wheat prices fell sharply on Monday (Aug 5, 2008), dragged down by a slump in CBOT prices and a glut of Black Sea feed grain.

 

Black Sea producers, Ukraine and Russia were using aggressive pricing on feed wheat after poor weather ruined the majority of their crops, UK farmers co-operative Grainfarmers said in a report on Monday.

 

"Ukraine and Russia seem to be taking every third country export opportunity and pushing feed wheat prices even lower to our main market Spain," Grainfarmers said.

 

November feed wheat futures in London fell GBP 1.75 to 127.00 pounds (US$248.8) a tonne, the lowest level for the benchmark new crop contract since late November 2007.

 

A surge in Ukraine's grain export is expected as it plans to increases from 4 million tonnes in 2007-08 to 16 million tonnes in 2008-09. However shipments are likely to be snagged by logistical problems, according to grain associations.

 

Lower CBOT wheat prices due to spillover selling after a sharp decline in CBOT soy also kept wheat prices weak in the EU.

 

Cheap Ukrainian feed wheat has also affected sales of French grains.

 

Humid weather both in Germany and northern France have also slowed harvest  in those areas. However demand from Mid East countries would continue to support prices.

 

The abundance of low quality wheat meant that high quality wheat could be sold at a premium this season, Rabobank said.

 

In Germany, there is concern about low protein levels in new crop wheat in several areas and this is depressing trade, one trader said.

 

Feed wheat was offered at 175-182 euros a tonne, one trader said.