Speculators seem to be rolling the grain markets, source of alternative energy as well as food, around as they chase the changing weather forecasts. London wheat was at its highest for more than two weeks as England seems to be the exception in Europe, adverse weather having cut the harvest by 20 per cent on last year’s levels. It could drop by three million tonnes to 12.9m tonnes, leaving it well below the five-year average, according to the National Farmers' Union.
Temperatures in the US Midwest were as much as 12 degrees Fahrenheit above normal for the past ten days. Developing plants will benefit as temperatures stay above freezing in the next two weeks, said John Dee, the president of Global Weather Monitoring in Michigan. US farmers are poised to cut wheat plantings to the lowest for four years in 2010, Informa Economics has said in a report which also pegs a lower estimate for this year's harvest. However, any impact on Chicago prices was clouded by a simultaneous announcement that Brazil is to screen all incoming US wheat shipments for traces of vomitoxin, a process which could land all American grain with the stigma of disease besides delaying transportation.
Wheat prices in the US have been falling, with winter wheat futures down 10 per cent last week, because of the drop in export sales. They are 40-50 per cent down on last year, partially because of the threat from Brazil. US wheat futures are mixed in Friday’s trade, struggling to find direction in the absence of fresh fundamental news. Light short covering heading toward the weekend managed to provide some price support underpin the market, analysts say. Chicago traded December wheat was US 1¼ cents higher at US$4.63 a bushel.
Corn futures fell on Friday in the US for the third straight day and soybeans dropped the most in a week as warm, dry weather boosted prospects for crops in the US, the world’s biggest exporter of the grain. Yet, three days ago corn surged a record nine per cent on forecasts for freezing temperatures next week in the central Midwest, and back on September 8 hopes of good weather took the most actively traded contract to a three-year low of US$3.02. December corn closed down US 11 cents, or 3.3 per cent, at US$3.18 a bushel in Friday’s trading on the Chicago Board of Trade. The price was down 0.5 per cent last week and was 22 per cent lower than this year’s peak.
Soybean futures for November delivery fell US 12 cents, or 1.3 per cent, to US $9.41 a bushel, the biggest decline since September 11. Last week, the price gained 4.2 per cent, snapping a two-week slide. The oilseed price is down four per cent this year.
There was a brighter picture in Europe last week, although brokers do not expect current levels to last because of the size of the harvests. European wheat futures traded higher on Friday on short-covering activity, with London supported by weaker sterling against the dollar. "Any rally from here presents a selling opportunity," said UK farmer-owned cooperative Openfield.
Paris November milling wheat traded up €1.25, or 1 per cent, at €121.25 a metric ton. London November feed wheat traded up £2.50, or 2.6per cent, at £97.50/ton. The firmer euro is making it difficult for European wheat to compete on the export market, although German ports are not too full, and with firmer prices, brokers are still hoping to do more export business before selling into the European Union intervention scheme becomes an option for farmers in November.
According to Germany-based brokers, around 3 million tons of wheat is expected to end up in EU intervention stocks in the 2009-10 marketing year, with around one million tons coming from Germany, due to ample supplies pushing prices to intervention levels.
