Panic buying sends wheat price to new highs (11-year)

Panic buying sends wheat price to new highs

http://news.yahoo.com/s/ft/20070807/bs_ft/fto080720071833568110;_ylt=Av17LY1BMseZwR7OHLTvHaT2ULEF

By Javier Blas and Chris Flood in London
Tue Aug 7, 6:24 PM ET


Wheat prices on Tuesday rose to a fresh 11-year high on panic buying by some food-importing countries amid tight global supplies.

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Middle Eastern and North African countries, such as Egypt, were rushing to the market to build up their stocks and their demand underpinned the rise in wheat prices, traders said.

On the Chicago Board of Trade, wheat for September delivery on Tuesday rose to a high of $6.70¾ a bushel and some traders said the price could approach $7.00 a bushel in the event of more negative news about the forthcoming crop. The contract later fell back by 2¾ cents to $6.61¼ a bushel.

European milling wheat also rose in Paris on Tuesday to reach EU220 a tonne, the highest ever since the contract was launched in the Euronext.Liffe platform in 1998. It later eased to EU215.50 a tonne, up EU4 a tonne.

Mehdi Chaouky, agriculture analyst at Diapason in London, explained that Middle East and North African countries were trying to build up their wheat stocks ahead of the start of the Islamic holy month of Ramadan in early September, a period when business activities slow down.

Global wheat stocks last year fell to a 26-year low and could fall even more this year, according to the US Department of Agriculture.

Rainer Guntermann, analyst at Dresdner Kleinwort in Frankfurt, said: "Extremely hot and dry weather conditions in southern Europe and Australia as well as rain and floods in northern Europe have tightened global supply for agriculture products."

Gavin Maquire, of Iowa Grain in Chicago, said export markets were seeing near-panic buying by importers as they tendered for substantial wheat orders.

Egypt yesterday bought 145,000 tonnes of wheat from Russia while Morocco this week issued a tender to buy about 1m tonnes of wheat, higher than market expectations.

The panic was exacerbated by Syria, an important grain exporter, on Tuesday cancelling some of its wheat sales after a poor crop.

Mr Chaouky added: "There is not more wheat to export from Europe, so the pressure from the importers would be felt in the US market."

US farmers last week sold 1.74m tonnes of wheat in the international market, the second straight week of large export volumes from the country. The previous week saw 2.1m tonnes of US wheat sold to foreign buyers, the largest weekly transaction since 1996.

Heavy rain has cut wheat crop yields in the UK's key cereal region of East Anglia by about 15 per cent from last year's levels, analysts said yesterday. The French harvest has also suffered because of rain during the summer.