EU wheat pushed down by falling US prices, harvest news awaited

HAMBURG: European wheat futures in Paris fell for a third consecutive session on Tuesday, pressured by a sharp fall in US futures and a cautious mood in Europe as traders awaited news on harvest progress to bring clarity to widely differing crop forecasts.

December milling wheat, the most active position on Paris-based Euronext, settled 3.50 euros, or 1.9 percent, lower at 183.25 euros ($215.03) a tonne. Late in the session it hit a one-week low of 183.00 euros.

"The market is seeing a pause while waiting to have a clearer picture of the harvests in France and Russia," one futures dealer said.

Euronext, which had climbed to a one-month high at 190 euros last week, remained underpinned by uncertainty over the extent of weather damage to crops across Europe and the Black Sea region.

In France, the farm ministry's first forecast for this year's soft wheat crop pegged production at 36.1 million tonnes, down from 36.6 million in 2017 but well above a 33.2 million estimate from Strategie Grains analysts that shocked the market 10 days ago.

Traders said crop estimates may start to converge in the second half of July once harvesting is well advanced.

A clean sweep for Russian wheat in an import tender held by Egypt on Tuesday also underlined the competitive disadvantage of French wheat. But some traders said healthy demand from Algeria and European Union countries would provide sufficient early season exports for France.

Chicago wheat slid more than 3 percent, with favourable conditions for corn and spring wheat encouraging selling.

In Germany, cash market premiums in Hamburg remained at recent high levels as concern intensified that dry weather is damaging this summer's harvest.

New signs that a smaller German wheat crop is expected this summer came as traders said German importers have purchased 300,000 tonnes of feed wheat largely from Romania and Bulgaria.

New crop standard bread wheat with 12 percent protein for September delivery in Hamburg was offered for sale unchanged at 6.0 euros over Paris December, with buyers around 5.0 euros over.

A very dry summer means a sharp fall in Germany's wheat crop is expected. Wheat in the north and east of the country has especially suffered.

"There is some rain forecast this week but it appears too late to make any major difference," one German trader said. "We will have wait to see what the harvest volume will turn out to be, and in turn what Germany's export prospects will be."

"But it seems some buyers are already making an attempt to keep prices down by taking some import supplies."