Dry conditions leading to higher prices

April 29th, 2011 - In the past period grain prices have been pushed higher due to concern of dry condtions in Western Europe. Especially main producer France, suffered from lack of rains. In the USA the wheat belt was badly in need of rains as well, whereas in Canada cold and wet conditions delayed planting of the spring crops. As a result, futures markets reacted higher.

Since this week some rainfall was reported and the upward price trend halted. Additionally there are rumours that Russia and the Ukraine might re-enter as exporter to the world market. A further potential weakish element is formed by the possibility of another Chinese interest rate hike, as well as lower economical growth rates for the USA.

Markets are thus in a position to stabilise or perhaps trend lower. It must be reminded however that for the time being grain fundamentals have not changed, and global current crop stocks remain at low levels. A good arrival of the new crops will therefore remain a necessity before substantial price relaxation can occur.

Until that time, grain markets will remain largely in the hands of the weather conditions.

 

 

 

 

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The above information is for general purposes only. Any reliance you place on the given information is therefore strictly at your own risk.

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