EU wheat drifts lower as traders await export spark

PARIS: Euronext wheat edged lower on Wednesday, curbed by a drop in U.S. futures and a backdrop of sluggish export demand.

Benchmark March milling wheat on the Paris-based Euronext exchange settled down 0.50 euro, or 0.2 percent, at 202.50 euros ($229.86) a tonne.

"Euronext is in a consolidation no-man's land," one futures dealer said.

U.S. wheat futures  fell more sharply but volumes were also light as a Wall Street closure to mark the death of former President George H.W. Bush reduced usual activity on financial markets.

Investors in the U.S. were also awaiting signs that China will resume imports of U.S. crops after a truce in the countries' trade dispute, while traders were digesting news of payment problems in Egypt that could delay the shipment of U.S. wheat to the world's biggest importer.

In Europe, traders said there was still a wait-and-see mood regarding export demand, which had been expected to pick up as Russian supplies dwindled but which remained tepid.

In monthly supply-and-demand forecasts, the European Commission left unchanged its estimate of 2018/19 European Union soft wheat exports at 20.0 million tonnes, down from an already modest 21.3 million last season, even as it increased its estimate of this year's harvest by 1.8 million tonnes.

The European market showed little reaction to news that Egypt had failed to issue letters of credit covering 16 recently purchased cargoes. The potential delays concerned Black Sea and U.S. wheat origins and problem was expected to be resolved given the importance of Egypt's subsidised bread programme, traders said.

Financial investors cut their net long position in Euronext's milling wheat futures and options in the week to Nov. 30, data published by Euronext showed.

In a separate monthly trading update, Euronext said its average daily volume of commodity derivatives, mostly wheat, reached 53,116 contracts in November, up 23.3 percent from the previous month but down 11.6 percent versus November 2017.