UPDATE: EU Wheat Settles At 11-month High On Weather Woes
May 18 2012 - 1:18PM
Dow Jones News
European wheat futures soared Friday to close at their highest
point for 11 months, as extreme weather in the former Soviet Union
boosted sentiment, while Chicago also added support as the U.S.
market responded to domestic dryness concerns.
November Paris milling wheat futures settled up EUR8.25, or
4.0%, at EUR215.25 a metric ton, the new crop contract's highest
closing level since June 13, having earlier hit an intra-day high
of EUR218.00/ton.
Wheat prices have been buoyed by dry weather conditions in
Russia, Kazakhstan and U.S. winter wheat producing areas, Barclays
said. While global wheat inventories are still hefty, weather
concerns and their impact on supply has supported prices, the bank
said.
Jaime-Nolan Miralles, commodity risk manager at FCStone Europe,
said Russian dryness will continue to foster a growing sense of
nervousness across the wheat world this weekend, with only
scattered rains expected over the weekend there.
Indeed, MDA EarthSat Weather said dryness remains extensive
across south central Ukraine, central and northern North Caucasus,
western Kazakhstan and north central and western Volga Valley.
Drier conditions are expected to continue there over the next 10
days along with very warm temperatures, and with further windy
conditions seen over the next few days crop stress will build and
yield potential decline, the forecaster said.
Frontier Agriculture said such a turnaround in wheat values,
given the very negative sentiment just a week ago, reaffirms
concerns that still underpin the cereal complex and highlights the
requirement of all the major crop regions around the world to
deliver in upcoming harvests.
The U.K. grain merchant, which is jointly owned by Cargill Inc.
and Associated British Foods PLC (ABF.LN), said that aside from the
questions over wheat, corn's progress will also add to the nervous
sentiment, with the grain only just being planted across the main
U.S. growing states.
Wheat was also the big mover on the Chicago Board of Trade as
the massive speculative short is being pushed out, but RCM Asset
Management analyst Doug Bergman said there was nothing to justify
the recent rally, despite the weather problems in Europe and the
U.S.
-By Michael Haddon, Dow Jones Newswires; 4420-7842-9289;
michael.haddon@dowjones.com
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