Wheat prices on Tuesday surged to a record high in Europe on tight global supplies and robust demand, in particular from developing countries.
Other commodities prices were mixed. Crude oil consolidated above $70 a barrel as the market bet that the US Energy Information Administration would on Wednesday announce that US crude oil inventories fell last week.
Base metal moved lower as prices were weighed down by ongoing concerns that the credit squeeze would slow economic growth.
However, underlying commodities fundamentals looked strong.
The Baltic Dry Index, a gauge of dry bulk shipping cost seen as an indicator of raw materials appetite, on Tuesday surged to an all-time high of 7,381 points.
The index has risen almost 70 per cent since January, propelled by a combination of robust demand, port congestion in Australia and Brazil, and longer trade routes.
Wheat prices moved higher after Sharad Pawar, India’s farm minister, said the country would float more wheat import tenders in 2007 to build up inventories.
India last year bought about 5.5m tonnes of wheat and 500,000 tonnes so far this year.
Strong buying on Tuesday by food-importing countries, such as Jordan and Iraq, also underpinned prices.
Euronext.Liffe November milling wheat rose as much as €5 to €242.5 per tonne, the highest since the contract was launched in 1998. It later traded at €241.75 a tonne, up €4.25 on the day.
Chicago Board of Trade December wheat rose 15 cents to $7.53¾ a bushel, just below last week’s all-time high of $7.54 a bushel. But profit-taking later pushed down the price to $7.35½ a bushel.
CBOT December corn mirrored wheat prices. It surged in overnight trading but later moved 4¼ cents down to $3.48¾ a bushel.
Soyabean prices also rose in early trading but later were flat at $8.72 a bushel.
Crude oil prices consolidated above the $70-a-barrel level as refinery glitches and forecast of lower US crude inventories provided some support. But concerns about the economy later pushed prices slightly lower.
Nymex October West Texas Intermediatemoved 38 cents lower to $71.60 a barrel while ICE October Brent fell 45 cents to $70.50 a barrel.
The head of the Organisation of the Petroleum Exporting Countries on Tuesday signalled that the oil market was well supplied ahead of the September oil cartel meeting.
Abdalla Salem el-Badri, Opec secretary-general, said on Sunday that the outlook for oil demand was clouded by financial markets turmoil. “The picture will be clear by December,” Mr El-Badri said.
Nymex RBOB gasolinemoved 0.19 cents higher to $2.020 a gallon. Nymex September natural gas moved 0.72 cents higher to $5.452 per million British thermal unit.
Base metals fell as weak housing market data dragged down copper and aluminium prices. A sharp increase in London Metal Exchange’s warehouse copper inventories contributed to push down prices.
In late London morning trade, copper fell 2.5 per cent to $7,280 a tonne while aluminium moved 2 per cent lower to $2,529 a tonne.
Zinc fell 4 per cent to $3.070 a tonne. Nickel was down nearly 1.8 per cent to $27,600 a tonne while lead moved 3.3 per cent lower to $3,177 a tonne. Tin prices rose 0.7 per cent to $14,800 a tonne.