European wheat futures in Paris dropped on Tuesday in thin volumes, pressured by weaker Chicago prices and a strong euro. December milling wheat on the Paris-based Euronext exchange was down 0.50 euro or 0.3 percent at 171.25 euros a tonne at 1601 GMT. The contract was still supported above the contract low of 169.25 euros which held several times last week.
"Buyers already took advantage of the previous drop in prices and there is no urgent weather threat for now," one futures dealer said. Traders were taking a relaxed view of hot, dry weather in France this week, after rain earlier this month stabilised crop conditions following dry, chilly weather in April. A slight improvement in weekly US winter wheat crop ratings also eased concern about possible damage to US wheat after recent heavy rain, pushing down Chicago wheat futures on Tuesday.
The euro hovered near a 6-1/2 month high against the dollar, curbing export prospects for countries like France and Germany in the face of cheaper Black Sea prices for the upcoming season.
In Germany, cash selling premiums in Hamburg were supported by demand for feed wheat from the German animal feed industry. Standard wheat with 12 percent protein content for May delivery in Hamburg was offered for sale at an unchanged premium of 2 euros over the Paris December contract. Buyers were seeking 1 euro over Paris. Feed wheat for May/June delivery in Germany's South Oldenburg feed wheat market was again quoted about 7-8 euros over Hamburg milling wheat at around 180-181 euros a tonne.
"Strong feed wheat prices are again supporting the milling wheat market in the face of poor export prospects with the euro so strong and low demand from flour mills for old crop," one German trader said. "Milling wheat is being sold for feed." "Prices in eastern Germany are being supported by buyers from Poland, where the rapid pace of exports in past months appears to have tightened supplies," the trader said.
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