October 30, 2008

European wheat futures Wednesday (October 29) rose in line with higher wheat prices in the US and stronger oil prices, traders said, even though the fundamentals remain bearish and stronger European currencies should have depressed wheat futures.

Another rally in stocks around the world also helped support stronger wheat prices.

"The world is in financial turmoil. Any good news is reason enough" for prices to rise, said a UK-based broker.

Paris November milling wheat ended up EUR2.75 or 1.9 percent higher at EUR145.50 a tonne on 1,279 lots traded. London November feed wheat closed GBP1 higher or up 1.1 percent at GBP89.25/tonne, on 61 lots traded.

One broker said wheat prices are rising but in thin volumes because prices are still low for some farmers. London feed wheat futures have fallen 45 percent since their February 2 peak of GBP165 a tonne. "The barn doors are shut. They'll be shut until the middle of January, beginning of February," even though there are is a wheat surplus at the moment, the broker said.

Farmers are beginning to wind down their trading activity. They traditionally wait until the New Year to release their stocks into the market, he said.

Milling-wheat futures in Paris are likely to experience more upside than feed-wheat futures, a London-based trader said, because milling wheat supplies are more constrained that feed wheat.

The recent depreciation in the euro against the dollar - setting aside the rally over the past two days - bodes well for European milling wheat exports, the trader said.

Nevertheless, physical trading volumes are thin because customers lack access to credit facilities in order to finance their purchases.