LONDON: European wheat futures in Paris ended lower on Wednesday, with stocks set to climb following a bumper harvest in France, while there remained stiff competition in export markets from the Black Sea region.
December milling wheat on the Paris-based Euronext exchange ended 0.75 euros, or 0.45%, lower at 169.25 euros ($186.29) a tonne.
French soft wheat exports outside the European Union are expected to climb to a four-year high in 2019/20 as the EU's biggest grain producer gathers a bumper harvest, farm office FranceAgriMer said on Wednesday.
Stiff competition from the Black Sea region, driven by Ukraine so far this season, and potentially from Argentina later in the year would cap French flows, Marc Zribi, head of FranceAgriMer's grain and sugar unit, told reporters.
Ukrainian grain traders' union UZA on Wednesday upgraded its forecast for Ukraine's 2019 wheat crop to 28.3 million tonnes, 600,000 tonnes higher than its previous estimate.
French soft wheat stocks at the end of this season were projected to rise by 32% to 3.3 million tonnes, which would also be a four-year high.
Dealers also noted EU exporters faced competition from Russia in Saudi Arabia.
"The market is waiting to see where the next export demand will come from if Russia starts to take a hold on tenders from Saudi Arabia," one German trader said.
Saudi Arabia's state grain buyer SAGO said on Monday it had bought 780,000 tonnes of wheat in a purchase tender, the first to permit offers of wheat from the Black Sea region after quality standards were relaxed.
"German wheat will have to move into new markets like Algeria and Tunisia," the trader said. "But in the near term, Sub-Saharan Africa is the main hope, and a ship with 47,000 tonnes of German wheat has just sailed for South Africa."
Wheat from the Baltic States is currently offered well under Germany and is expected to be mainly selected for the EU section of the Saudi purchase, traders said.
For wheat with 12.5% protein of the type bought by Saudi Arabia, German wheat was offered at about 2 euros over Paris fob for October/May delivery to German ports against 4.5 euros under Paris for Lithuanian wheat delivered to the port of Klaipeda in the same period.
Standard bread wheat with 12% protein for September onwards delivery in Hamburg was offered for sale unchanged at 1.0 euro under Paris December. Buyers were seeking at least 2.0 euros under Paris.