European wheat prices fall sharply

European wheat prices fell sharply on Tuesday, pressured by plunging US grain futures, in turn weakened by concern over rising trade tensions between the United States and China. Benchmark December wheat on the Paris-based Euronext exchange unofficially closed down 1.5 percent or 2.75 euros at 176.00 euros ($203.58) a tonne. The contract earlier on Tuesday hit 174.75 euros, its lowest since May 16.
EU prices were being driven by the US market and US/China trade tensions rather than fundamental factors in Europe, one broker said. The most active wheat contract in Chicago was down 1.7 percent in early Tuesday trade on weakness in the grains sector and pressure from a rapid US wheat harvest. US soybean futures plunged on Tuesday to their lowest level in nearly 10 years as escalating trade tensions between the United States and China, the world's biggest soy buyer, prompted fund-driven selling.
"The market is erratic," one French cash broker said. "Neither the sellers nor the buyers are taking risks and the market is sluggish." In Germany, cash market premiums in Hamburg were marked up to compensate for the fall in Paris, with attention remaining on dry weather threatening crops in north and east Germany. New crop standard bread wheat with 12 percent protein for September delivery in Hamburg was offered for sale at 3.5 to 4 euros over Paris December against 2.5 euros over on Monday.
But the sharp fall in Paris prices was making premiums difficult to assess, traders said. Dryness this summer means damage to wheat in north and east Germany is expected. But traders stressed wheat in south and central Germany is developing positively. "Weather this week in north and east Germany remains largely dry and the overall picture of dryness stressing wheat crops has not changed," one German trader said. "More rain is forecast in the driest areas from Thursday but we will have to see if it actually arrives."
"There is more rain in Lithuania and other parts of the Baltic States which will be welcome to help crops there which have been suffering from dryness."