PARIS: Euronext wheat edged up on Friday but was set for a sharp decline over the year after stiff export competition from the Black Sea region eased worries about war disruption to the grain trade. March wheat on Paris-based Euronext was up 0.9% at 223.75 euros ($247.33) a metric ton by 1308 GMT.
The front-month position was consolidating after falling to 220.50 euros twice in the past week, a level not previously seen for the contract since December 2021.
Over 2023, front-month prices are down nearly 28%, breaking a run of gains in the past three years. Supply fears due to Russia’s invasion of Ukraine, which propelled prices to record highs in 2022, have subsided this year as Russia maintained large exports while Ukraine established a new shipping channel to replace a UN-backed arrangement that Moscow withdrew from in July.
A rally in the euro to a five-month high against the dollar this week has continued to curb the export competitiveness of European Union supplies.
Egypt on Thursday cancelled an import tender following offers in which Black Sea origins remained cheaper than French supplies despite Russia’s apparent enforcement of an export price floor.
“Russian traders were not troubled seriously by the Russian export price floor in Egypt’s tender, holding a price lead over most rivals except Ukraine, and with private sales offers of Russian wheat still way below levels seen in international tenders,” a German trader said. Expanding trade through Ukraine’s Black Sea corridor was adding to Black Sea competition, despite wartime risks illustrated by damage to a vessel that hit a mine this week.
Ukraine in December has exported by sea its biggest monthly volumes of wheat and corn since March, LSEG shipping data showed, and traders said traffic increasingly included large vessels bound for Asia. “Wheat is being much more actively traded in Ukrainian seaports, especially feed wheat, and this is a factor the EU market will have to deal with more in the new year,” the trader said.
Morocco, which has become the biggest export destination for EU wheat as Russia increased sales to Algeria, remains the focus for new EU sales for the rest of the season, traders said. Shipments to China were supporting French wheat exports, with LSEG and other shipping data showing seven vessels have departed this month with another three due to load.
Deferred positions on Euronext have held up better this year, supported by early concerns about next year’s harvest following rain-hit planting in western Europe. September wheat was trading at 232.75 euros, down 15% over the year.
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