EU wheat steadies as export outlook unclear

Fawad Maqsood August 24, 2019

PARIS: Western European wheat prices were steady on Friday, consolidating after losses this week as traders awaited a clearer picture on export prospects after big harvests across the continent.

Benchmark December milling wheat on Paris-based Euronext was down 0.25 euro, or 0.2%, at 170.25 euros ($190) a tonne by 1623 GMT.

It had touched a life-of-contract low at 169.00 euros on Wednesday but was finding support around 170 euros, dealers said.

A slight rise in Chicago wheat, supported by strong weekly US exports and an easing in the dollar, lent some support to Paris futures.

But a rebound in the euro, from a three-week low against the dollar, curbed Euronext.

Weakness in Chicago corn and soybeans, fuelled by China’s announcement of additional tariffs on US goods in an ongoing trade dispute, also capped wheat prices.

“The market has managed to stem its slide, with some support from the brisk US wheat exports,” Nathan Cordier of consultancy Agritel said.

“In France, people are waiting to see how exports develop. For the start of the export campaign in July there wasn’t much stock, then for August prices weren’t quite competitive, but in the next few weeks we might see French wheat’s renewed competitiveness.”

The recent price fall coupled with less aggressive selling than usual by Russian exporters has raised expectations of increased overseas demand for a bumper French harvest.

But hopes have been tempered by stiff competition from Ukraine, as well as reluctant selling by French farmers.

A lack of sellers again contributed to a firm trend in wheat premiums in export zones on the French cash market, brokers said.

In Germany, standard bread wheat with 12% protein for September onwards delivery in Hamburg was offered for sale unchanged at 1.0 euro under Paris December. Sellers were seeking at least 2 euros under.

Traders were assessing the new crop as farmers were expected to wrap up remaining harvesting this weekend in the northern state of Schleswig-Holstein after recent rain delays.

“Despite the showers over the past three weeks, wheat quality in the final regions is still reasonable and has not fallen to feed quality in my view,” one trader said.

“Protein levels of 11-11.5% are being achieved in the final areas which should be sellable to flour mills. But it may not be good enough for export where 12% protein is usually demanded.”

Germany will harvest about 23.1 million tonnes of winter wheat in 2019, up from a drought-affected 19.5 million tonnes last year, farming association DBV said on Friday.

“The association’s forecasts tend to be on the conservative side but overall the harvest this year is not bad,” another trader said.

Copyright Reuters, 2019

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