Wheat futures hit by a further fall
Wheat futures hit by a further fall
JULY wheat futures suffered their biggest drop in over a month this week, adding to speculation that old crop values may have peaked.
LIFFE contracts closed on Tues-day at just above £80/t, £1+ down on Fridays price. A supply squeeze had seen values rise by £10/t to a high of £84/t the week before last.
In a complete turnaround, trad-ers report more sellers coming to the market as buyers lose interest.
"The market definitely has a softer feel to it," says Gerald Mason, senior economist at the Home-Grown Cereals Authority. "As well as the supply and demand situation, futures speculators are now creaming off their profits."
Wheat prices have risen to a level that is prompting users to switch to other grains, such as cheaper barley or imported maize, he adds.
"What happens from here is hard to tell. It depends on when harvest starts and whether growers hang on to some of their old crop to sell later in the year with the new crop.
"But despite new crop supply shortages in the UK, prices can only rise to levels at which it is as cheap to import grain." *