Paris wheat steadies with Chicago in pause after US rain rally

PARIS: Euronext wheat futures ended little changed on Friday as market worries over a US tariff threat against Mexico prompted Chicago grain prices to consolidate following a weather-fuelled surge this week.

Front-month September milling wheat futures on Euronext settled unchanged on the day at 185.25 euros ($206.72) a tonne, after earlier falling to 183.25 euros.

The Paris market had been pressured as Chicago wheat gave up as much as 2%, before recovering as US futures turned slightly higher.

US President Donald Trump caught investors by surprise on Thursday by announcing he will impose a 5% tariff on all goods from Mexico and then push the levy higher until a flow of illegal migrants ceases.

The remarks weighed on demand sentiment in grain as Mexico is the top buyer of US corn and a major buyer of US wheat.

"Trump hitting out against Mexico has dampened the market even if the US weather forecasts are not great," one futures dealer said.

However, the consequences of torrential rain on US corn planting and the condition of ripening winter wheat remained the focus of grain markets.

US grain belts are forecast to see drier weather this weekend before showers return next week in some areas.

The International Grains Council on Thursday cut its forecast for world corn output in 2019/2020, as it lowered its US crop estimate by 9 million tonnes.

Concern about US harvest prospects has offset supply pressure from favourable growing conditions across Europe.

In France, 79% of soft wheat crops were rated good or excellent as of May 27, unchanged from a week earlier, farm office FranceAgriMer said.

The European market was monitoring a hot spell settling in across the continent, including in top wheat exporter Russia, although it was seen as too early to anticipate crop stress.

Volumes on Euronext were moderate, with some market participants taking a long weekend break after Thursday's Ascension Day holiday in some European countries including France.

The September contract added 4% over the week after peaking at a 4-1/2 month high of 190.00 euros on Wednesday.

Over May, spot futures climbed more than 8% during a volatile month in which they set a life-of-contract low at 167 euros before rallying to this week's multi-month peak.