EU wheat rises on strong demand, shrugs off Russian export tax cut

PARIS: European wheat prices jumped on Monday, supported by renewed demand and bargain buying in the absence of US markets and with traders unimpressed by Russia’s decision to cut its grain export tax to make its wheat more competitive on world markets.

Benchmark September milling wheat on Paris-based Euronext unofficially closed 2.8% percent higher at 344.00 euros a tonne.

The Chicago Board of Trade was closed for Independence Day.

The price fall in recent weeks to back near levels before Russia’s invasion, has attracted international wheat importers to the market, with European wheat winning business due to a lack of competitiveness from Russian wheat.

The sanctions-hit country, the world’s largest wheat exporter, cut grain exports taxes sharply on Friday to support shipments in the July-June marketing season.

“I think the market is still trying to work out what the Russian government actually wants to achieve with its export taxes, but a reduction would be expected to mean more Russian wheat will be sold internationally,” one German trader said.

“However, world supplies remain so tight that the EU still looks likely to be able to sell all the wheat it has available in export markets. The fall in Chicago prices to their levels before the Ukraine invasion is also likely to stimulate more purchase tenders,” he added.

Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), is in private negotiations with trading houses about buying wheat without issuing an international tender, traders said on Monday.

“A renewed competitiveness of Russian wheat is to be expected but whatever happens, the world market needs these volumes and it will be difficult for Russia to regain its full export regime,” consultancy Agritel said in a note.

Welcome rain in much of Germany on Friday underpinned expectations of a good wheat crop this summer.

Germany’s farm cooperatives’ association currently forecasts a German wheat crop this summer increasing 5.9% on the year to 22.65 million tonnes.

Sellers of standard 12% protein wheat for September delivery in Hamburg were offering around 18.5 euros a tonne over the Euronext December contract.