Rangebound EU wheat market takes sober view on export glimmer

PARIS: Euronext wheat was little changed on Wednesday as export optimism generated by a first sale of French wheat to Egypt in 18 months was tempered by a lagging pace of shipments and continuing competition from other origins.

March milling wheat, the most active contract on the Paris-based Euronext exchange, settled unchanged on the day at 205.75 euros ($234.93) a tonne.

The trend was encouraged by subdued trading in Chicago, where U.S. futures were capped by disappointing export news and caution over trade talks between China and the United States.

Egypt's first purchase of French wheat since July 2017, as part of a 360,000-tonne tender deal on Tuesday, offered a clear sign of the declining competitiveness of top wheat supplier Russia.

But large sales of Argentine wheat to Algeria, France's main export market, and a slow pace of west European exports so far this season were curbing expectations.

"The market is hesitating between on the one hand the slow pace of sales and large stocks in silos, and on the other the competitiveness of EU wheat which is back on the scene," a French grain broker said.

French soft wheat exports outside the European Union so far in January were only just over half the December volume, shipping data compiled by Reuters showed.

Romanian wheat, which claimed half of the volume purchased by Egypt on Tuesday, was helping boost EU prospects while also putting pressure on west European prices.

"A lot of Romanian wheat was offered and bought in the purchase tender from Egypt, which is bad news for west Europe just as we were hoping for more export business as Russian prices rise," a German trader said.

In Germany, cash premiums in Hamburg slipped as buyers declined to accept the overnight rise in Paris prices.

Standard bread wheat with 12 percent protein for February delivery in Hamburg was offered for sale at 4.5 euros over Paris March against 5.0 euros over on Tuesday.

Some buyers were unwilling to go much above 210 euros in outright prices.

Feed wheat prices remained firm despite continued talk of brisk sales of feed barley from France into north German feed markets.

Feed wheat in the South Oldenburg market for February/March delivery was offered for sale above milling wheat at around 218 euros a tonne, with buyers seeking 216 euros.

Euronext data showed that financial investors raised their net long position in Euronext's milling wheat futures and options in the week to Jan. 25.