Market change

July 14th, 2010 - A clear, unexpected, change in the market occured over the past two weeks.

Concerns about the dry weather in Western Europe, substantially reduced spring plantings in Canada (abt.-/-20%) because of the ongoing rains there, reduced forecasts of the Russian crop, as well as increasing debate and discussion on the actual size of the EU old crop stocks, led to an up-move of about Euro 30 p/ton for malting barley, new crop. In numbers, new crop malting barley traded from about Euro 140 to Euro 170 FOB Creil.

Going back in time, we so far see a repeat of the situation of 2006. During July-August it was then very hot in France, and like today, we came from a depressed market situation. In the months to follow, till Sept/Oct, the market saw a first leg up from approx. Eur 135 to a range of Eur 160-170 FOB Creil.

This move has now been made in less than two weeks.

Basically the above shows that with generally smaller upcoming crops, weather concerns alone are enough to create a first leg up in our markets. The big question is however, whether this is sustainable and whether a second leg up can follow.

The decisive elements to follow are wheat and corn. Wheat harvest will start in the southern European areas, like France, in about one week and corn will follow several weeks later. In case we do not get any surprises there, than markets will have a chance to stabilise, also because harvest progress of the US wheat crop is rather good so far. Should more negative news follow however, than markets have the chance to stage a second leg higher.

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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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