EU wheat consolidates after slide with virus, Australia crop in focus

PARIS: Euronext wheat futures steadied on Wednesday after a day-earlier plunge as nervousness over the Omicron coronavirus variant eased while traders waited for a clearer picture of Australia’s harvest.

March wheat, the most active contract on Paris-based Euronext, was up 0.50 euros, or 0.1%, by 1545 GMT at 286.00 euros ($324.55) a tonne.

Gains were limited by a large chart gap opened during Tuesday’s slide and which was now acting as a resistance zone, traders said.

On Tuesday, March futures lost 4% as they touched a near three-week low, with fears of the economic impact of the Omicron variant pushing the contract away from last week’s peak of 311.50 euros, a record for a second-month position.

Traders said wheat saw particularly strong liquidation after investment funds had built up large long positions during the recent rally.

The risk-off mood abated on Wednesday with share and oil prices regaining ground.

Signs of fresh demand from importers, with Tunisia issuing a wheat tender following Monday’s purchase by Egypt, lent some support to wheat markets. Traders were waiting for updates from Australia, where the harvest is seen as crucial to rebalancing tight global availability of milling wheat supplies.

An increased official estimate of Australia’s wheat crop, now seen at a record high, earlier this week tempered worries about supplies, contributing to the pullback on Euronext.

However, continuing wet weather in eastern Australia could reduce milling quality.

The market is also assessing Russian export prospects. Russian wheat secured a sale to Egypt as part of Monday’s tender, despite a rising Russian export tax.