US wheat futures down on lower exports

US wheat futures fell on Friday with a stronger euro and weakness in Chicago contracts, hit by lower-than-expected US export data, driving European futures down after previous sessions' gains. Chicago soybeans and corn retreated after this week's strong gains with the market digesting Thursday's news China appeared to have decided against a plan to import millions of tonnes of corn, according to industry sources.
While the wheat market is expected to remain in consolidation mode next week, corn and soybeans are likely to trade higher, analysts said. "We see wheat prices trading in a range next week, at around $7.60 to $7.80 a bushel, unless there is fresh bullish news," said Kaname Gokon, a deputy general manager with Okato Shoji Company in Tokyo. "There is some impact coming from lower wheat exports from the United States. The damage to the Australian wheat crop has been factored in."
Heavy rains in Australia have damaged harvest prospects. Chicago Board of Trade March wheat was down 1.08 percent to $7.75 a bushel by 1212 GMT. In Europe, milling wheat futures in Paris fell as a drop in US markets and an earlier one-month high for the euro encouraged selling after a rally this week on US government crop data.
Euronext March milling wheat fell 4.00 euros or 1.57 percent at 251.25 a tonne by 1212 GMT, with support seen at 250 euros. The market momentarily tumbled to a one-week low of 247 euros, with operators atributing this to a trading error. "It's a technical correction after the jump we had on Wednesday with the USDA report, but this doesn't change the overall market trend," Lucille Brazzini, analyst with French consultancy Offre & Demande Agricole.
"Exchange rates are playing quite a big role at the moment." The euro hit a one-month high against the dollar on Friday, extending a rally due to tough talk on inflation from the European Central Bank and an easing of debt worries after solid bond sales by Portugal and Spain. A stronger euro makes exports from the 17-country currency zone more expensive and thus less competitive on world markets.
US wheat has lagged this week's rally in corn and soybeans due to export sales data unveiled by the US Department of Agriculture showing US wheat export sales last week hit the lowest weekly level in 10-1/2 months. European futures remained broadly at levels last seen in March 2008, underpinned by adverse crop weather and shrinking supplies around the world, as underlined by cuts to US stocks in US Department of Agriculture forecasts this week.
The global food supply and demand balance is tight but the situation is not as severe as in 2008 because of sufficient food grain stocks, a senior official of the United Nation's Food and Agriculture Organisation (FAO) told Reuters. CBOT corn for March delivery eased 0.35 percent to $6.40-1/2 a bushel by 1214 GMT and soybeans for March were 0.07 percent power at $14.15 a bushel.