European wheat futures ease

European wheat futures eased on Monday as expectations of record US corn and soybean harvests and easing concerns about disruption to trade from the Ukraine conflict kept the market focused on ample global supply. Paris futures continued to be underpinned by chart support at 170 euros, plus a recent slide in the euro against the dollar which has given some hope to French exporters struggling with lower-than-usual quality after a rain-hit harvest.
November milling wheat on the Paris-based Euronext market fell 1.50 euros, or 0.9 percent, to 170.50 euros a tonne by 1533 GMT. December wheat in Chicago fell to a contract low on spillover pressure from corn and soybeans, as fears about frost damage in the Midwest eased and markets turned their attention to a monthly government crop report this week, which is expected to raise US production estimates to new records.
"The French supply balance should remain heavy for the whole season since a large harvest has coincided with a higher than usual proportion of feed quality crop, upsetting traditional export flows," consultancy Agritel said in a note. "The fall in the euro is providing some support for the market and is allowing European origins to regain competitiveness internationally," it said.
A tender by Algeria, typically the main export destination for French wheat, will provide a further indication of French export prospects. The country's state grains agency is seeking milling wheat for shipment in the second half of December, with the deadline for bids on Wednesday, traders said on Monday. The agency had not modified its tender terms, despite talk it might do so given the lower French crop quality, traders said.
A fragile cease-fire in eastern Ukraine along with confirmation of strong early-season exports from both Ukraine and Russia also curbed wheat markets. Fighting between Kiev and pro-Russian rebels and a backdrop of diplomatic tensions between Moscow and Ukraine's western allies have fuelled sporadic rallies on wheat markets this year as traders worried about potential disruption to trade from the major wheat exporters.
German cash wheat premiums in Hamburg were little changed but remained supported by good export prospects. Standard new crop wheat with 12 percent protein content for delivery in Hamburg from September was offered for sale at an unchanged premium of 9.5 euros over the Paris November contract. Buyers were offering 8.5 euros over Paris.
"Supplies look adequate for German domestic milling and feed use but there is concern the political crisis in Ukraine could disrupt the Black Sea region's wheat exports, so supporting German export prices." Germany's 2014 wheat crop will increase by 12 percent on the year to 27.9 million tonnes, the German agriculture ministry said on August 29.