Paris wheat hits two-month low on concerns about export demand

PARIS: Euronext wheat futures fell on Monday to a new two-month low amid persistent concerns about tepid export demand, despite easing competition from Russia.

March milling wheat on the Paris-based Euronext exchange settled down 1.25 euros, or 0.6 percent, at 201.75 euros ($227) a tonne.

The contract earlier fell to 201.50 euros, its weakest since Dec. 6 and below a previous two-month low of 201.75 euros last Thursday, but held above the 200-euro threshold.

Euronext was also pressured by Chicago wheat, which gave up gains from Friday when the market focused on a U.S. Department of Agriculture (USDA) estimate showing a drop in U.S. winter wheat acreage.

Wheat markets on Monday factored in other USDA data showing increased U.S. stocks as well as raised estimates of Russian supply and exports.

"Friday's USDA figures were already unfriendly for Matif (Euronext) by increasing Russia's production and exports," a futures broker said.

"French wheat is still finding itself surrounded by export competitors."

The Russian agriculture ministry's confirmation on Monday of its 2018/19 wheat export forecast of 37 million tonnes also dampened export expectations in western Europe.

Weekly European Commission data showed European Union soft wheat exports so far in 2018/19 totalled 10.1 million tonnes, 22 percent below last season's level.

In Germany, however, traders found some encouragement for exports.

"There is a steady flow of export loadings in German ports," a German trader said, noting a ship with about 40,000 tonnes is due to sail this week for Mozambique and another has been loading 30,000 tonnes for Guinea.

Cash premiums in Hamburg rose to compensate for the fall in Paris, with standard bread wheat with 12 percent protein for February delivery in Hamburg offered for sale at 7.0 euros over Paris March against 6.0 euros over on Friday.

In Poland, prices were firm in the past week amid a lack of selling by farmers.

Millers raised purchase prices by 10 zloty ($2.6) on the week to 850-890 zloty a tonne for 12.5 percent protein wheat for March delivery.

Feed wheat prices were around milling prices for February/March delivery at 840-880 zloty a tonne, up 10 zloty.

Exporter purchase prices for 12.5 percent protein rose 5 zloty on the week to around 880 zloty a tonne for February delivery.

"Poland's wheat exports remain very slack, but in February two large vessels are loading wheat for Saudi Arabia, one of 65,000 tonnes and one of 55,000 tonnes," a Polish trader said.