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Wheat rallied this week after measures to end the eurozone sovereign debt crisis emerged from the EU summit.
Although the details and implementation process is still somewhat unclear, the latest measures, which include leveraging the EFSF to €1 trillion and a 50% write down on Greek debt among others, removed some uncertainty from the market, giving risky assets a bit of a breather. Wheat was also helped by speculation that cold, dry weather conditions in the US and Ukraine will damage winter crops.
These rumours should continue to support wheat prices in the short term. However, it should be noted that wheat had encountered some selling pressure earlier this week on news that Egypt, the world’s biggest importer of the commodity, bought 120,000 metric tons of Russian grain, shunning US supplies. High wheat prices and better weather conditions for wheat on Black Sea farms had triggered a surge in cheaper Russian wheat exports. It would be interesting to see whether this trend continues in the months ahead.
