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PARIS: European wheat fell on Wednesday with soon-to-expire September futures losing nearly 5% after a surging to a 13-year high earlier this week as operators in search of high-quality wheat turned to Euronext to cover their short positions, traders said.

This year’s wheat harvest in the European Union’s largest grower of the grain, France, is showing poor average milling quality levels. Mounting concerns of low global supplies of high quality wheat has driven a rally on world markets in the past weeks.

“Many of those who were short are now covered, so there is far less support. The ladder has been pulled,” a trader said, adding there could be more big swings ahead of expiry.

The September contract, which expires on Sept. 10, was down 4.9% by 1530 GMT at 259.50 euros a tonne after falling as low as 257.25 euros earlier in the session. On Monday it hit 283.75 euros, the highest front-month price since March 2008.

The most traded December contract was off 0.1% at 246.25 euros a tonne, mostly following U.S markets.

In Germany, a large line of ships is forming to load wheat for Algeria, traditionally France’s largest export customer.

Quality problems with the French crop this summer led to reports that Algerian shipments were being transferred to Germany, Sweden and elsewhere in the Baltic region.

“Three ships are each loading 30,000 tonnes of wheat for Algeria in Germany this week and another four are scheduled to each load 30,000 tonnes for Algeria in coming days,” one German trader said. “Along with completed shipments, this means about 360,000 tonnes of German wheat will be shipped to Algeria in August.”

Although affected by summer rain, Germany’s crop is in better condition than France’s.

Germany’s 2021 wheat crop is expected to fall 3.6% on the year to 21.37 million tonnes after poor weather, said Germany’s agriculture ministry on Wednesday.

Standard 12% protein wheat for September delivery in Hamburg was offered for sale at around 9 euros over Paris December against 10 euros over on Tuesday.

“There is lower demand today with less supplies being called up to load ships,” another trader said. “But with the number of ships scheduled to load wheat, I expect demand and premiums in Hamburg to remain firm.”

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