 |
Business International |
|
Drought fears
ignite global wheat prices
|
World wheat prices flared on Thursday on fears that dry weather from Europe to Australia will damage crops and hit already tight supplies at a time when their use in biofuels is also on the rise, analysts said. French wheat futures jumped to contract highs in early trade, with November, the benchmark position for the upcoming crop, up three euros to 153 euros a tonne.
|
|
|
US May futures were up around 11 cents at $5.17 in Asian electronic trade overnight. "Support stems from concerns that the recent lack of rain and forecasts for more dry weather in Europe will trim wheat production," a trader in Seoul said. Analysts said a continued lack of rainfall in Europe and Australia, both big wheat growing regions, had rattled markets. French prices have now risen by 15 percent this month. Australia, which can grow up to 25 million tonnes of wheat a year, faces another bad season -- last year drought decimated its harvest with production barely exceeding 10 million tonnes. Prime Minister John Howard said last week the country faced an "unprecedented dangerous" drought. And in Europe, a lack of rain across the main wheat growing regions from France to Ukraine, has dented earlier optimism that harvests this summer would be good. "In view of world stocks, at their lowest level in 25 years, and low European ending stocks, any weather problem for the new season will have a serious impact on the (supply/demand) balance," French grains analyst Agritel said. Crop failure in Australia was one reason world wheat stocks now stand at near record lows, the other is growing demand from biofuels, particularly for corn in the United States. This is expected to lower stocks of all grains in the major producers -- United States, European Union, Australia, Canada and Argentina. Analysts estimate ethanol distillers will use 2.15 billion bushels of US corn, or 20 percent of the 2006 crop, in making the alternative fuel, and the total might reach 3.1 billion bushels for 2007 crop. Investment bank Goldman Sachs said in a recent report that agricultural markets were poised for a long-term rally due to rising global food and biofuels demand. "A combination of food, feed and fuel demand for crops has created an upward shift in the trend demand growth for agricultural products," it said. "The recent rise in agricultural prices is not a transient spike but rather represents the beginning of a structural increase in prices," it added.
|
|
|
|
|
|
DAVID EVANS, REUTERS
LONDON
|
|
|
|
|
|
|
Benzer Haberler 
International
