Business | Markets
US wheat prices touch new highs
Soft wheat prices soared across the globe yesterday, with the US market scoring new all-time highs, as concerns over tight supplies and strong export demand triggered heavy buying by investment funds.
- Reuters
- Published: 00:14 February 7, 2008
Paris: Soft wheat prices soared across the globe yesterday, with the US market scoring new all-time highs, as concerns over tight supplies and strong export demand triggered heavy buying by investment funds.
US wheat futures surged by the daily 30-cent limit to a record high of $10.33 a bushel in electronic Asian trade, the third consecutive limit up gain.
European wheat followed the move, raising more than 4.5 per cent on contracts for the current season with benchmark March gaining as much as 12 euros on the day at a four-month high of 272.50 euros a tonne.
Firmness in Chicago Board of Trade (CBOT) wheat was also supported by high-quality wheat markets in Minneapolis and Kansas City and helped push up soybeans and corn futures by more than one per cent from the previous close.
Importers across the globe have sped up wheat purchases or tendered for more on growing concerns over global supplies and fears that a rise in fund demand - partly prompted by weaker financial markets - could push prices even higher.
"There is demand out there and supplies for high qualities are meagre," a European trader said, adding that he saw the trend continuing, at least in the medium term.
Lars Steffensen, managing director of commodity trading at Ebullio Capital Management, saw the grains market staying firm, within limits.
"I wouldn't expect grains to come off anytime soon. On the other hand I think until we actually know exactly what the fundamental picture is I don't think you are going to see it rally another 10 or 20 per cent from here," he said.
"I think we are probably getting to the point where the prices are overdone to the upside."
In Asia traders stressed investment funds' significant impact on the market.
"Wheat is surging by the power of investment funds. Of course, bullish fundamentals are behind this, but this rally is simply too much," a trader at a Japan-ese farming cooperative said.
The new record high of $10.33 a bushel reached on CBOT wheat's front-month March surpassed the previous record of $10.09-1/2 reached on December 17 and took its gains this week to near 10 per cent.
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