EU wheat futures rise in cautious trade ahead of USDA report
European wheat futures rose on Wednesday, pushed up by a rise in Chicago prices in hesitant trading ahead of US government estimates of global grain supply and demand due for release on Thursday. Worries that hot weather forecast in the United States could hurt corn and soybean crops continued to support grain markets, while wheat also remained underpinned by the promising export outlook.
Copyright Reuters, 2013
But the prospect of ample supply from northern hemisphere wheat harvests, despite some production downgrades, was still a curb on prices and was encouraging farmers to sell during rallies, dealers said. November milling wheat on the Paris futures market rose 0.75 euro, or 0.3 percent, at 197.50 euros a tonne by 1145 GMT, as the contract continued to test chart resistance around 197 euros.
The contract had hit its highest in more than a week on Tuesday at 198.00 euros before paring gains by the close. US wheat futures also rose on Wednesday but movements were tentative in the run-up to Thursday's global grain supply and demand estimates from the US Department of Agriculture (USDA). In France, wheat harvesting is set to start this week after some initial barley cuttings in the past few days.
First forecasts of the wheat harvest by France's farm ministry and farm office at 35.9 million tonnes came below trade estimates, though output would still be up 1.1 percent on 2012. Wheat markets have drawn some support from a series of export deals, led by massive purchases by China. French wheat could pick up fresh business in a tender by major customer Algeria due to close on Wednesday, with a recent slide in the euro against the dollar boosting hopes for export.
GERMANY German wheat was also firm in restrained dealing ahead of the USDA report on Thursday and with the German harvest outlook continuing to improve. Standard new crop milling wheat for September delivery in Hamburg was offered for sale at 204 euros a tonne with buyers at around 203 euros. "There is a cautious mood ahead of the USDA report on Thursday which can cause a lot of fireworks in the market," one German trader said. "Overall the German wheat crop condition is improving with sunshine this week helping development."
"I would expect a start to the German wheat harvest in about two to three weeks, which is about one week behind the normal schedule, not a major delay considering the serious concern we had following the very long winter and cool spring." "I have a good feeling about the upcoming size and quality of this year's German harvest." Although the dollar was weaker on Wednesday, the firmer trend seen in the dollar since late June has boosted EU export prospects and was also underpinning prices, traders said.