Wheat futures react to global economic turmoil

Wheat futures markets fell sharply on the back of yesterday’s plunge throughout the world’s big stock markets.

Values on the Chicago futures exchange fell to their daily limits yesterday as fears of a recession in the US economy sent stock markets into turmoil across the world. And France’s MATIF futures market slipped by €12.5 shortly after trading began this morning.

Yesterday the FTSE 100 index of London’s leading shares recorded its biggest fall since the terrorist attacks on New York in September 2001.

But most of the panic was seen in Asian markets as fears of a deteriorating US economy caused traders to distance themselves from their biggest trading partner.

But traders now hope the worst may have passed, with some European markets recovering this morning.

And most traders reckon that agricultural markets will be relatively safe from the disruption as food commodities like wheat and soya remain in tight supply worldwide.

Grain trader Gleadell’s David Sheppard said futures prices had recovered their lost ground after a day of hectic activity. “It’s still a very volatile market and no commodity market can just sit there and ignore other money flares. Yesterday there was a lot of money coming out of equities and a lot of investment funds have interests in the wheat market. But it’s not driven by market fundamentals.”

Pat Tomlinson, head of agriculture at Barclays, said the long-term drivers for agricultural commodities remained in place. “Any recession would only delay the influence of a wealthier population on markets – a bigger world population will still come.”