Euronext wheat prices were mixed on Wednesday as traders set worries about Chinese plans to raise import duties on US crops against adverse weather for US wheat and transport snags caused by a rail strike in France. Beijing rattled grain and other markets by announcing a retaliatory tariff package against US goods, including soybeans, the most valuable US farm export to China.
May milling wheat, the most active contract on the Paris-based Euronext exchange, settled unchanged on the day at 166.25 euros ($204.37) a tonne. Further-away delivery positions ended slightly lower.
The spot contract lost as much as 2.75 euros in early trade as news of China's proposed tariffs rattled commodity markets and encouraged the contract to pull back from a one-month high touched on Tuesday. But Euronext later steadied as US soybean futures trimmed losses, after plunging 5 percent following China's tariff announcement, with some traders seeing China's move on soybeans as a negotiating threat that won't be implemented.
"The Chinese announcement has not had such a big impact on the physical market because people simply don't believe it's going to happen," one French broker said. Physical premiums in France were steady, again supported by logistical problems as rolling rail strikes against a government reform continued.
"Matif (Euronext) is tracking Chicago to some extent, but the main issue for the market here is logistics," another broker said. "With the rail strike, we are going to have cases of force majeure and contracts that are not executed and put back to the summer."
The rail stoppages have left some inland operators with few alternatives to trains given a lack of available trucks and restrictions on certain waterways. Traders reported that Algeria bought 330,000 tonnes of wheat in a tender on Tuesday, most of which was expected to be sourced from France, although reaction was muted given a disappointing French export season.
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