PARIS: European wheat prices fell on Thursday as intensifying concerns about a global economic slowdown sparked a sell-off in stock markets.
Thursday, 18 August 2011 22:59
* Losses for European wheat were moderate, however, as the market was reassured by a limited drop for US corn futures, typically the driver of global grain markets.
* "Paris wheat is holding up rather well. It's surprising as we expected the market to rapidly come and test the 195 euro level," a futures dealer said. "The fall for corn in Chicago is not that severe, people can't believe it."
* Benchmark November milling wheat was down 1.13 percent to 197.75 euros a tonne by 1616 GMT. It also faced technical resistance having failed again on Wednesday to hold above the upper end of its recent range around 200 euros.
* US corn gave up 1.5 percent in Chicago while US wheat slid more than 2 percent as it pulled back from a two-month high hit after a seven-day rising run.
* Weaker-than-expected US economic data, including a drop in the Philadelphia Federal Reserve's business activity index, unnerved investors, prompting a plunge in equity markets and crude oil, and pushing the higher and gold to a new record.
* "The stock markets are in a state of despair," another dealer said.
* The rout on financial markets took attention away from a wheat purchase by Egypt, the world's largest wheat importer, but the latest success for resurgent Russian exports was in any case seen as predictable given Russia's current price advantage.
* Egypt's state buyer purchased 180,000 tonnes of Russian wheat, along with 60,000 tonnes of Romanian wheat.
* In other export news, the market was awaiting the results of a durum tender by Algeria, with some traders saying negotiations were proving difficult because the importers had concerns about the quality of new-crop French durum.
* Weekly European Union data showed 233,000 tonnes of soft wheat export licences had been awarded, leaving the total so far this season down the year.
* In oilseed markets, November rapeseed in Europe shed 1.01 percent to 417.00 euros a tonne, as its lead market, US soybeans also saw a modest drop compared to a 5 percent plunge for crude oil .
* In Germany, prices were pushed down by the fall in Paris but support remained from both concern about rain damage and moves by some traders to buy back previous contracts.
* Standard new crop bread-quality wheat for September and later delivery in Hamburg was offered for sale down two euros at 212 euros a tonne with buyers at around 210 euros.
* "Price support is also coming from local traders seeking to buy back previous sales contracts because of fears that they will not be able to deliver the wheat quality they promised," one trader said.
* Repeated rain has now disrupted Germany's wheat harvest for weeks. Much of the crop in north and north-east Germany, key export producers, has still not been gathered although work in south and central Germany is making better progress.
* "Harvesting is getting underway but the ground is still too soft in some areas and it looks like hopes are being pinned on the weekend for major progress," another trader said.
* The rain-delayed harvest is also expected to hit the rapeseed harvest, offsetting a better-than-expected French crop, and losses for German rapeseed could get worse as farmers prefer to harvest wheat first.
* "Farmers are likely to harvest the wheat before rapeseed as wheat faces the greatest price loss. Feed wheat prices have fallen to between 10 to 30 euros a tonne below milling wheat which is a lot of money to lose," the second trader said.
* In the UK, harvest progress picked up in the East Midlands and Eastern regions regions due to dry weather, while showers in the North and West have restricted harvesting in the past week.
* "The period of relatively dry weather in southern and central England allowed rapid progress to be made on the wheat harvest in these regions bringing the overall harvested wheat area up to almost 50 percent of the total, ahead of the five-year average," crop consultants ADAS said in a report on Thursday.
* The report said the quality of the early harvested wheat was good but yields are expected to be below average, with current estimated yield range of 7.3 to 7.7 tonnes per hectare.
* Italian wheat prices were little changed on the week in thin trade with main grain bourses closed this week for summer holidays, while maize prices fell by about 10 euros hit by expectations of bigger new crops and increasing imports of the Black Sea origin feed wheat, traders said.
* "Maize should have fallen even more, by 20-30 euros given that harvesting has started in some regions, but prices are supported by demand from biomass makers and food industry," said one trader.
* In rare deals, bread quality wheat for prompt delivery was offered at 230-235 euros a tonne, including delivery charges, while maize dropped by up to 10 euros to 255-260 euros a tonne, traders said.
Copyright Reuters, 2011