EU wheat steady as Russia export tax, USDA report in focus

PARIS: Euronext wheat futures were little changed on Friday as traders continued to assess the potential impact of proposed export taxes in leading supplier Russia, while also looking ahead to a widely followed world crop report from the US government.

March milling wheat on Paris-based Euronext was unchanged on the day at 224.75 euros ($270.22) a tonne by 1550 GMT.

The front-month contract was consolidating after falling to a three-week low of 221.25 euros on Wednesday.

Support from a slight rise in Chicago wheat was countered by a rebound in the euro against the dollar.

Grain markets were generally subdued as attention turned towards Tuesday's US Department of Agriculture (USDA) world crop report to gauge tightening supplies.

European traders were studying Russia's announcement this week of an ongoing formula-based tax on wheat exports from June, replacing fixed-rate levies to apply from Feb. 15.

Traders said news this week of the longer-term tax triggered some selling by Russian farmers.

That curbed futures markets after recent highs, although traders said the longer-term Russian tax scheme could restrain Russian exports and shift more demand towards other export zones like the European Union.

"There are a lot of questions about Russia," Michael Magdovitz, commodity analyst with Rabobank, said.

"For wheat, that's a sticking point. People often look for Russian wheat to lead the market."

Despite a large purchase this week by top wheat importer Egypt, traders said there were signs that recent multi-year price highs were deterring other buyers.

"There is disappointment that Saudi Arabia is still absent as a buyer. The last international wheat tender from Saudi Arabia was back in November last year, so they surely have a requirement, but you wonder if high prices are keeping them out of the market," one German trader said.

Standard milling wheat with 12% protein for February delivery in Hamburg was offered for sale unchanged at around 6 euros over Paris March, but with a wide gap from buyers seeking about 4 euros over Paris.