EU Wheat Posts Sharp Declines

Posted by Nogger - a legend in his own mind at 19:07 | Categorized as

16/11/10 -- EU wheat futures closed with sharp declines Tuesday, despite a resurgent US dollar, on worries over Chinese demand for commodities in general.

Nov10 London wheat closed down GBP4.00 at GBP159.75/tonne, and Nov11 London wheat fell GBP5.00 to GBP141.00/tonne. Jan11 Paris wheat closed EUR8.75 lower at EUR210.00/tonne and Nov11 Paris wheat was down EUR8.25 to EUR189.25/tonne.

That was the first time front month London wheat had closed below GBP160/tonne in 27 trading sessions.

Ideas that the tough talking Chinese are set to introduce price control measures to curb soaring domestic food inflation, along with a crack down on commodity speculation, rising interest rates and further tightening on lending led to widespread liquidation on grains.

Chinese demand has underpinned the entire market of late, with "informed" analysts regularly citing the continued growth of that sector as inevitable.

With China routinely accounting for 70-75% of all weekly US soybean export sales, the market is now wondering what happens if their domestic fiscal policy suddenly curbs demand?

Dismal EU prospects courtesy of the PIGS continue to undermine the euro.