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Wheat prices in western Europe steady on export demand

Wheat prices in western Europe were steady on Friday, supported by export demand and harvest problems in the southern hemisphere, but the market remained subdued due to a holiday closure in the United States. US markets were closed on Thursday for the Thanksgiving holiday and Chicago grain futures will only reopen for a reduced session later on Friday.

Benchmark January milling wheat on the Paris futures market was up 0.50 euros or 0.19 percent at 270.75 euros a tonne by 1301 GMT. Export prospects for European wheat remained healthy with supply running low in Russia and Ukraine and poor weather affecting harvesting in Argentina and Australia.

"The continued pace of weekly European exports remains supportive for prices," French grains consultancy Offre & Demande Agricole said in a note. The European Union cleared 380,000 tonnes of wheat export licences this week, official data showed on Thursday. This was down on last week's two-year high of 696,000 tonnes but the season's total remained above the level a year earlier.

The data also confirmed the EU's strong maize import needs, with the season's volume reaching 3 million tonnes, double the year-ago level, in a trend that traders say could free up more wheat for export. Argentina cut its wheat output forecast following months of heavy rain, and in Australia harvest results continued to show lower protein levels. In a consequence of dwindling supply in major exporter Russia, officials in neighbouring Kazakhstan said they would step up grain shipments to Russia.

Weekly US grain export data due later on Friday will also give the market a fresh indicator on global demand. German prices were little changed in keeping with the US holiday lull, but high German premiums over French prices continued due to export optimism and internal demand from mills.

Standard milling wheat for January delivery in Hamburg was offered for sale little changed from late Thursday levels at 280 euros a tonne with buyers at around 278 euros. "I think there has been some good internal demand from mills in the internal German market recently at higher prices than quoted in the Hamburg export market," another trader said. "This encouraged some local traders to sell to German mills and then take short cover in the Hamburg market, which in turn is helping to keep Hamburg at such a high premium over Paris." Strong demand for German milling wheat continued to be expected from British buyers, with trade estimates that Germany could sell several hundred thousand tonnes to Britain before the new crop in 2013.

Copyright Reuters, 2012


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