New Contract Lows For London Wheat

It might be a public holiday in America, but it's business as usual in London, with the front four contracts all setting new lifetime lows this morning.

Front three months March, May and July now all trade below GBP100/tonne and new crop November10 is in danger of joining the sub one hundred club, currently standing at just GBP101/tonne.

Paris wheat is managing to just about hold above lifetime lows, with EUR125/tonne once again proving a difficult nut to crack. The low for the March contract was EUR123.20/tonne set back in mid-September.

The current weakness of the euro is helping French wheat hold reasonably steady, relative to UK wheat.

For what it's worth last year's March London wheat's peak of GBP138.80/tonne was set in the first week of June 2009, although the contract actually traded as much as GBP23/tonne higher than that, when it first began trading in June 2008.

Back in June 2009, the pound was trading at similar levels to today against the euro, and only marginally higher (around 1.62) against the dollar.

Incidentally, back in June 2008, when the lifetime highs were set, the pound was around 1.95 against the dollar and 1.26 against the euro. So much for the theory that a strong currency is bad for prices!

I think that we can safely say that the current slump in prices has more to do with the mechanics of wheat supply and demand than currency levels.

Attracted by current low prices, Iraq is tendering for "at least" 100,000 MT of wheat it's Grain Board says. It frequently buys more than it tenders for, and is unlikely to find itself short of willing suitors from the usual quarters.