EU wheat little changed on US holiday
Western European wheat markets were little changed on Thursday as a US holiday closure encouraged prices to consolidate and operators weighed brisk recent exports against signs that European wheat was becoming less competitive. Chicago grain futures, the global price benchmark, did not trade in view of the Thanksgiving holiday and will only reopen for a short session on Friday.
Copyright Reuters, 2013
January milling wheat on the Paris-based Euronext market was up 0.25 euros, or 0.1 percent, at 207.75 euros a tonne at 1631 GMT. The contract remained close to a five-month high of 208.25 euros struck on Monday, reflecting bullish export news, but lacked fresh impetus to break clear of chart resistance around 207 euros.
An official estimate of the Argentine wheat crop on Thursday at 8.5 million tonnes, below the volume seen by some private forecasters, provided support as it confirmed poor harvest prospects that should cut Argentine export supply and shift demand to other exporters like the United States and the European Union.
The EU awarded 577,000 tonnes of weekly soft wheat export licences, official data showed on Thursday. This put the volume so far in 2013/14 more than 50 percent above the year-ago level and kept the EU on course for a record total this season. This came after French wheat clinched a sale of 60,000 tonnes to Egypt's state buyer in a tender on Wednesday.
Brokers said the sale widened the premium on Thursday for cash prices at the port of Dunkirk, which is able to load in one go panamax vessels for Egypt, compared to Rouen, a shallower inland port that cannot fully load such volumes. But export sentiment was tempered by the modest volume bought by Egypt's GASC and the fact there were cheaper offers of US and Romanian wheat, turned down by GASC as they did not meet the tender terms.
"The offers by exporters reminded observers that US wheat is competitive on the international market," Arnaud Saulais of Starsupply Commodity Brokers said in a note. Jordan's decision on Thursday to cancel a wheat import tender for the second time in a row, with the country reportedly viewing offers as too high, also showed the recent rally in international prices could curb demand. In Germany, traders were also concerned about prospects for new sales, despite strong current shipments that were underpinning prices.
"The general export outlook remains positive, with crop problems in the Black Sea, Australia and Argentina reducing competition, but the market is seeking signs of fresh export sales," one German trader said. "There is a brisk loading programme in German ports but this is old business already in exporters' books." "It was encouraging that German wheat was offered in Egypt's tender on Wednesday although it was too expensive for a realistic chance.
New sales to Iran also look highly possible when sanctions are suspended in the coming weeks," the trader said. Standard new crop milling wheat for January delivery in Hamburg was offered for sale unchanged at 3 euros over the Paris March contract with buyers seeking 2 euros over Paris.