EU wheat prices fall as export prospects dim

Euronext wheat fell on Wednesday, pressured by easing US futures, a stronger euro and a reduced forecast for French exports this season. Spot March milling wheat on the Paris-based Euronext exchange closed 1.25 euros, or 0.8 percent, lower at 159.50 euros a tonne. The May contract, which now has a higher open interest than March, ended down 1.50 euros, or 0.9 percent, at 161.50 euros.
"Export demand for wheat is poor, with Russian wheat still holding the price lead over west Europe," one German trader said. "Good volumes of Russian wheat are still available on export markets this week despite the usual Black Sea winter transport stress." Farm office FranceAgriMer lowered its forecast for French soft wheat exports outside the European Union in 2017/18 for the fourth month in a row, pointing to stiff overseas competition and low prices that have made French farmers reluctant to sell.
Along with a cut to expected wheat exports within the EU, the export revision outweighed a reduction to harvest supply and led FranceAgriMer to increase its end-of-season stocks forecast. "After yesterday's 400,000 tonne reduction to soft wheat production by the farm ministry, the market wasn't necessarily expecting an increase in French ending stocks, but that is the reality of lost market share in exports," one futures dealer said.
Stiff competition from Russia and strong sales of Argentine wheat to Algeria, France's main overseas market, have curbed French exports and overshadowed a breakthrough in the Saudi market, traders said. Port data showed a fourth cargo of French wheat this season for Saudi Arabia was due to load this month. In Germany, cash market premiums in Hamburg were little changed, with internal market prices losing their price lead over ports.
Standard bread wheat with 12 percent protein content for February delivery in Hamburg was offered for sale unchanged at about 5.50 euros over Paris March. Feed wheat in Germany's South Oldenburg market was still priced just above milling wheat. For delivery from February onwards, it was offered for sale unchanged at 169 euros a tonne, with buyers seeking 168 euros. However, feed wheat was well below the premiums held over milling wheat in late 2017.
Standard 12 percent wheat for May/July delivery in the Berlin/Brandenburg region traded to German mills on Wednesday at 166 euros a tonne. German mills also bought new-crop wheat from the Czech Republic and Poland on Wednesday at 166 euros a tonne for August/December delivery.