London Wheat Matches Contract Lows

London wheat futures slid to levels not seen since last September on Friday, with March London wheat ending down GBP1.35 at GBP97.05/tonne, and Paris march wheat EUR0.50 lower at EUR125.50/tonne.

Earlier in the session March London wheat hit GBP96.50/tonne, matching the life of contract low set just after harvest last autumn.

The relative strength of sterling was one factor behind the move, the pound rose above 1.16 against the euro on Thursday, a level not seen in more than five months. The single currency continues to be weighed down by nervousness over a possible enforced bail-out of Greece.

French wheat fared better, aided by the euro's demise and also buoyed by talk that Algeria had bought a substantial quantity of French wheat in a tender. The news, as yet unconfirmed, suggests that the North African nation may have purchased at least 500,000 MT of wheat - probably French - taking advantage of the recent decline in value of the euro.

There has been a marked pick-up in interest in placing barley into intervention in the UK this past 10 days or so, according to my sources. This is partly due to the fact that the February intervention price will be based on today's value of the euro against the pound, as opposed to levels of around 1.12 when the January price was set.

The UK market took a further set-back this week after the much heralded start-up of the Ensus facility on Teesside proved to be a bit of a non-event due to technical difficulties.

The US market also continues to decline, with March CBOT wheat having declined by 67 1/2 cents, or 12.5%, during the month of January. As in Europe the hefty weight of stocks is largely to blame.