EU wheat close to contract lows in lack of supportive news

PARIS: European wheat fell for a second consecutive session close to contract lows on Thursday as traders failed to find supportive elements, with a fall on US markets, good crop prospects and concerns of stronger competition from Black Sea origins.

Renewed tensions in US-Chinese trade discussions, aimed at resolving a year-long tariff battle, were weighing on financial markets at large.

New crop benchmark September milling wheat on Paris-based Euronext, was down 0.9 percent by 1532 GMT to 170.50 euros ($191.39) a tonne, not far from its contract low of 169.75 euros.

December was down 1 percent at 174.00 euros a tonne after touching a new contract low of 173.50 euros.

Activity was low with a holiday in Russia and Ramadan fasting in Maghreb countries, large importers of European wheat.

Rainfall in Western Europe and the Black Sea confirmed prospects of hefty wheat crops in 2019.

"Everything is all right in big producing regions," said a Euronext trader.

Russia's Sovecon agriculture consultancy confirmed on Wednesday that it expects Russia's 2019 wheat harvest to stand at 83.4 million tonnes.

"This will dampen the outlook for prices unless there are significant crop shortfalls due to bad weather. The current rainfall in Germany should at least reduce the risk of this happening there," Commerzbank said in a note.

In its first outlook for 2019, crops, the United Nations' Food and Agriculture Organization (FAO) projected wheat production to climb 5 percent, supported by a jump in Russian output to 82 million tonnes.

Eyes are also on Russia's proposal to extend a zero tariff on wheat exports.

The US Department of Agriculture will release its initial 2019/2020 global crop forecasts on Friday, with expectations of larger wheat and corn stocks.

In Germany, cash premiums in Hamburg were little changed as dealers assessed the impact of welcome rain on crops.

Standard bread wheat with 12 percent protein for September onwards delivery in Hamburg was offered for sale flat at around 0.5 euro under Paris December.

Welcome rain fell in Germany in past days and more is forecast over the weekend. Sub-soil water reserves remain depleted after last summer's drought and heat-wave which heavily damaged crops.

"Attention is now firmly on the new crop and the rain this week in much of Germany was excellent news," one German trader said.

"A lot more rain is still needed to replenish soil water reserves. But it must be stressed wheat is overall in a good state after the mild winter and there is no immediate worry about crop conditions.