HAMBURG/PARIS: Euronext wheat fell on Monday to approach contract lows as market attention shifted away from military escalation in the Middle East and back to tough export competition and large expected harvests in the Northern Hemisphere.
September wheat on the Paris-based Euronext exchange was down 1.1% at 200.50 euros ($232.28) a metric ton at 1525 GMT to trade near last week’s contract low of 198.00 euros, but just holding over the psychologically important 200 euro level. The contract gave up most of its 2% rise from Friday when investor concern over Israeli strikes against Iran encouraged short-covering by investment funds. Chicago wheat also fell over 1% on Monday.
“Overall there’s no real crop threat so the market is struggling to sustain gains. We’re heading for bigger production this year so any rebound is selling opportunity,” a futures dealer said. A rise in the euro to near Thursday’s 3-1/2-year high against the dollar also underscored an unfavourable export outlook for western European wheat.
News of a wheat import tender to be held by Algeria on Tuesday promised to add fresh demand after Friday’s 100,000 ton purchase by Tunisia. But Black Sea origins were seen dominating again, with French wheat expected to be overlooked by Algeria such as in recent months due to diplomatic tensions between Algiers and Paris.
Algeria is a vital customer for wheat from the European Union, especially France, but Russian and other Black Sea region exporters have been expanding strongly in the Algerian market.