Grain under pressure on financial uncertainty

Grain markets have continued their downward trend this week, with financial uncertainty weighing heavily on international prices.

London feed wheat futures ended the week to Tuesday (22 November) down by £2.75/t for November, and by £5.75/t for July 2012. “Financial crises have led to a sharp decline of commodity prices,” said a report by analyst Agritel. Conformation that the Ensus biofuel plant will not re-open until spring 2012 has also weighed on the UK market.

“Current prices become attractive for buyers, as long as financial markets do not sink into depression.” Milling wheat demand remained thin pre-Christmas, leaving premiums at just £10-12/t over feed.

Paris rapeseed futures dropped by €12/t (£10.30/t) in the week to Tuesday, to €416/t (£358.70/t) for February 2012. However, the downside appeared limited, given strong Chinese demand for vegetable oils, said traders.

The collapse of futures broker MF Global may have greater consequences than initially expected, with US clients’ losses standing at US $1.2bn (£768m), twice as much as originally estimated.

The case has raised many questions about the future of commodities trading on futures markets.