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Wheat Market Update - Wednesday 10th June 2009
UK and Europe Harvest Overview
London wheat futures have been trading lower recently on weaker financials, currency movements and US commodity markets coupled with beneficial rains across Europe.
Harvest prospects remain favourable across Europe with recent rainfall offering relief to dry crops. Meanwhile, physical bread wheat trade in the UK remains fairly quiet at present amid light farmer selling and low availability of high specification wheat. Physical values of high specification bread wheat appear to have divorced themselves slightly from the futures market with the large swings in futures values not occurring in day-to-day physical trade.
US/World Overview
Global wheat markets continue to remain volatile with fund involvement impacting daily values. A stronger U.S. dollar during the early part of the week, weakening equity and energy markets and a lack of new demand offered little support to wheat markets. However, this could quickly change if investors feel the market has been oversold, dollar values considerably weaken and any weather concerns are realised.
Traders will now turn their attention to the June USDA report which is due to be released on the 10th June. Initial forecasts suggest that winter wheat production will be downgraded slightly, although more attention will be focused on the corn and soyabean production and carryout stock figures which are more likely to impact wheat values.
Summary
Global wheat markets will remain volatile in the near term and continue to be influenced by dollar movement and corn and soyabean direction as fund investors look to maximise their returns. However, values may start trading more independently as the northern hemisphere moves into the harvest period and analysts have a better idea of production figures. A major weather concern over the coming weeks would still influence values and offer support to global wheat markets.
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