France makes dough on the weak euro

Investors crying over the slide of the euro can soothe their sorrows with some good old comfort food: French baguettes. While the euro zone sovereign debt crisis has sent ripples through the global economy - even the Gulf's industrial exports to European countries may be hit - there has been at least one beneficiary. Wheat futures in France have risen in recent weeks as the lagging euro has made the French commodity a relative bargain, said Luke Chandler, a commodity analyst with Rabobank in London.

"[French] prices relative to the US dollar have improved significantly," Mr Chandler said. "So French wheat is the cheapest in the world, even though we saw this rally in domestic prices ? and we've seen as a result some rapid export business in the last couple of weeks." Since mid-March, French grain futures have bucked a global downward trend, rising about 12 per cent, and are gaining momentum, Mr Chandler said. The trend continued yesterday, as the Euronext benchmark's November milling wheat futures rose slightly to ?142.50 a tonne in mid-afternoon trading from ?141.50 on Wednesday.

The rise in the price of French wheat defies a slump in the global price of the commodity. The past three years have produced bumper crops, generating a surplus in world markets. The next round of wheat harvests may continue the oversupply trend. "We're currently approaching harvest in the northern hemisphere - in Europe and the US," Mr Chandler said. "Conditions at this stage are very good, in both parts of those major producing areas."

Further weakening of the euro could help France become the second-biggest wheat exporter after the US and put a lot more dough in the country's cash registers. "It obviously benefits French and European producers, because their local prices have been appreciating, and it also allows them to capture more market share in the global trade," Mr Chandler said. @Email:[e-mail]