European wheat prices pare gains

European wheat prices pared early gains on Thursday, weighed down by a fall in US markets, easing concerns about heat stress to west European crops and weak export demand for European wheat, notably French. Front month September milling wheat on Paris-based Euronext, was down 0.3 percent by 1605 GMT to 182.25 euros a tonne. It had risen as high as 184.75 euros in morning trade, near a three-week high of 185.25 euros hit on Tuesday, but turned negative when Chicago opened in the red later in the day.
In Europe, a heatwave this week that has seen temperatures reach 40 degrees Celsius (104°F) in parts of France and Germany has added to doubts about harvest yields following recent hot, dry weather in top wheat exporter Russia. However, some traders said the hot spell is likely to have come too late to cause any significant damage. "The high temperatures were stressful for crops but the market continues to take a relaxed view of the weather and is not expecting a major crop setback," one German trader said.
"High temperatures are also forecast over the weekend and early next week but wheat is in a generally late stage of development and should be able to take the heat." Following temperatures of 30 degrees Celsius to peaks of 39 degrees on Wednesday, temperatures in Germany were around 20 to 30 degrees Celsius on Thursday. Standard bread wheat with 12% protein for September onwards delivery in Hamburg was offered for sale at 5 euros under Paris December against 4 euros under on Wednesday.
Traders were not optimistic Germany will win a large share of Saudi Arabia's tender for 12.5 percent protein wheat. Cheap Russian wheat is excluded by Saudi Arabia. "Prices being offered by other Baltic Sea exporters, especially Lithuania and Latvia, are currently so low that Germany is not seen as having much of a chance for a high-volume sale," another trader said. "Sales offers from Lithuania and Latvia for 12.5 percent wheat are about 4 euros below Germany."
"Germany could get one or two shipments in the Saudi tender but our prices would have to fall sharply to win more." "The Baltic States are facing better crops this summer following the drought last year and will no doubt want to get some sales in their books." French brokers were also keenly awaiting Algeria, France's main export client, to come back on the market, noting that French wheat was not competitive on many other markets. "We need to sell on markets that France can reach out to," one said.