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Wheat Market Update - Monday 9th February 2009
UK and Europe Harvest Overview
Trading activity over the last 2 weeks has been relatively quiet. The main driver for UK LIFFE wheat futures has been currency movement with Sterling fluctuating between 0.87 and 0.94 against the Euro.
UK May wheat futures rose sharply to £125/t but have eased back to levels seen two weeks ago and are currently valued at c.£118/t. Buyers short of nearby physical wheat appear to have taken some cover and have withdrawn from supporting prices.
Volumes of feed wheat sales from farmers did increase as prices rose but obtaining volumes of bread making quality has remained difficult as premiums remain at previously reported high levels.
New crop November 2009 LIFFE futures continue to be well supported at c£125/t and with one or two weather related stories currently circulating should be enough to stop values falling.
French exporters have sold 180000t of wheat to Egypt (180000t), however, Black Sea origin wheat remains aggressively priced and the most likely source for further export interest to other major importers.
US/World Overview
US markets have also eased from recent highs following beneficial rains in South America and disappointment that more US wheat was not included in recent major purchases seen from Egypt.
Fundamentals continue to weigh heavily on any real price recovery. Once any potentially price supportive news has been absorbed by the market the tendency of late has been for US prices to drift lower once again.
Logistical problems are being seen in Western Australia where the sheer volume of grain arriving at export destinations this season is struggling to be handled and loaded onto awaiting ocean freight.
Summary
Although the recent surge in prices proved to be unsustainable; currency volatility appears to be the main daily price driver at present.
A few weather related stories need to be closely monitored for the developing crop and hence for the time being the market appears to have found its level.
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