"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Sunday, August 24, 2008

Damp harvest depresses UK wheat quality and price

In the post on the closure of the Statoil Kvitebjørn pipeline and it's effect on domestic UK gas prices on August 20th we noted in a postscript that East Angian barley barons were having to spend £5 a tonne on drying grain - double the cost of last year. We noted that wheat was being quoted in Chicago @ US$8.74 a bushel (35.74 bushels to a tonne) = £174 and that futures are being quoted in the high US$9.80 's for the whole of next year.

Life is always a little more complicated than it appears.

Tthe protein and gluten content declines with each day the ripe crop stands, and leaves the crop vulenrable to rusts and other fungal diseases and sprouting, as a consequence the resulting grain declines in value for flour millers and ends up as feed wheat.

The poor summer and harvest season has been shared across much of Europe and there is such a glut of lower quality grains that the London wheat futures market has virtually ground to a standstill with prices hovering around a 13 month low of £121 a tonne.

This has the bizarre effect that prices are now so low that it has depressed prices and trade in Brazilian corn and US sorghum for animal feeds.

The last quoted price on the Euronext Liffe exchange for November '08 Milling Wheat is 194.75 Euros = £155.43 a tonne. This agrees with reports in the Wall Street Journal that London prices are £30 per tonne below Paris prices. See U.K.'s Wheat Loses Ground By Sarah McFarlane , "The U.K.'s wheat crop, beset this year by damp weather, is seeing its price sink in comparison with grain from the Continent.. "

See also reports from Bakers & Millers

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