August 16, 2006


European cash wheat: France on holiday; UK prices slip



The European cash wheat market was at a near standstill Tuesday (Aug 15) as a religious holiday was being observed in several key grain trading nations, including France.


However in the UK, feed wheat futures dropped to a near one-month low in early dealings due to quality concerns, but then trimmed most of those losses later in the day.


"There were a few dodgy samples around that sold for really cheap prices," said a broker. "It made everyone nervous."


UK November feed wheat was down GBP0.25 late Tuesday at GBP80 a tonne with 188 lots traded.


Recent rains in the UK and parts of Germany have raised some quality concerns for the final stages of the wheat harvest, as rain on ripe grain can lower attributes needed for baking.


However, cool temperatures are expected to limit quality losses. In addition, traders hold that much of the higher quality varieties have been cut first.


Up to 70 percent of the overall wheat crop in southern UK wheat areas had been cut by Monday, but areas in Lincolnshire, Yorkshire and further north were at best 50 percent done, UK merchant Grainfarmers said Tuesday. However, this included about 75 percent of the UK milling wheat area.


As long as it remains relatively cold, quality should hold up, according to Grainfarmers, David Doyle.


A UK broker that even though US prices have fallen recently and European Union exports are slow, there is less pressure this year for the EU to export. "The US looks cheap, but funds there need to sort themselves out," he added.


Grainfarmers' Doyle added, "It is a case of waiting and seeing how the final position unfolds before we know how much we have to market and what the export demand is."


French standard wheat for Rouen was last quoted Monday at mostly EUR122.00/tonne for August-September delivery and at EUR123.00/tonne for October-December. There were no actual trades reported in French cash or futures prices Tuesday.


In competing grains, the UK barley harvest is running about 10 days ahead of normal, with most of the winter varieties cut and about a third of the spring varieties left, UK's Home Grown Cereals Authority said.


So far, UK winter barley varieties are seeing at least average quality and yields, but the scenario for spring barley is more mixed, said HGCA.