EU wheat falls after 10-month high

Euronext wheat fell sharply on Wednesday as futures on both sides of the Atlantic pulled back from 10-month highs linked to concern about dry weather stressing crops in major wheat belts around the world. December milling wheat, the most active contract on the Paris-based Euronext exchange, settled down 5.50 euros, or 2.9 percent, at 183.25 euros ($213.58) a tonne.
In closing deals it fell to a one-week low of 183.00 euros, with dealers saying technical impetus to fill a chart gap at that level added to selling pressure. The contract had on Tuesday set the latest in a series of 10-month highs at 190.50 euros. Chicago futures also fell sharply, having already closed lower on Tuesday after a 10-month peak.
Wheat markets have been gripped by concerns about dryness hurting crops in parts of the United States, Canada, Australia and Russia, all major wheat exporters. There have also been emerging worries about dry conditions in northern Europe, including in Germany's northern export zone. An improvement in weekly crop ratings for US winter wheat encouraged the pullback in prices, but traders said risks remained for Russian wheat with little rain expected in the key southern export region.
"Fundamentally the complexion of the market hasn't changed. It hasn't rained in Russia and not much rain is forecast for the coming days. And yet the market has given up more than the gains seen since the end of last week" one futures dealer said. Non-commercial market participants sharply increased their net long position in Euronext's milling wheat futures and options in the week to May 25, data published by the exchange showed, suggesting financial investors had contributed to the recent rally.
In Germany, cash market premiums in Hamburg were marked down, but with a lack of farmer selling limiting the falls. Standard bread wheat with 12 percent protein content for May delivery in Hamburg was offered for sale at 18 euros under Paris December against 17 euros under on Tuesday.
"Consumers have been saying the rise in Paris was overdone and want to follow Euronext back down after the steep increases in the past week," one German trader said. "But there is a sharp reduction in willingness among farmers to sell old crop because of fears about dryness damage to wheat crops in parts of north and east Germany."