Markets

EU wheat prices suffer minor setback after rally

Published Updated

* A firmer euro encouraged the market to pause following strong gains linked to concerns over Black Sea supply and spillover support from a rally in financial markets.

* "We are seeing a slight dip today but feed wheat demand and the rumours of Russian export curbs are providing background support," one German dealer said. "The stronger euro in the past couple of days has taken some shine off the export hopes and is a depressing factor."

* March milling wheat was down 0.75 euro or 0.4 percent at 208.50 euros a tonne by 1702 GMT, as the contract eased from a four-month high of 210.25 euros on Thursday.

* CBOT wheat also suffered a modest setback after six straight rising sessions.

* Wheat markets were stirred this week by talk that Russia could introduce export restrictions due to a shrinking surplus and that cold weather could hurt developing crops in both Russia and neighbouring Ukraine.

* "Some zones (in Ukraine) are very exposed and the risk of winterkill remains," French grains consultancy Agritel said in a note. "However, according to our estimates, less than 10 percent of the area sown with winter grains is located in these vulnerable zones."

* A drought has already thought to have damaged about a third of winter wheat in Ukraine even before the onset of freezing winter conditions.

* In France, freezing weather was also forecast in the coming week in what would be the first wave of severe cold in what has been a mild winter so far.

* But temperatures were not expected to fall sufficiently low or fast to threaten crops, traders said, adding the impact would depend on the duration of freezing weather.

* In export news, Tunisia bought 50,000 tonnes of optional-origin feed barley in a tender, traders said, with one tipping the grain to come from the United States or Australia.

* Feed wheat futures in London were little changed in thin trade with May off 0.25 pounds at 165.25 pounds a tonne.

* Dealers said a weakening in sterling versus the euro helped to improve the outlook for exports. The bulk of UK wheat exports are destined for the euro zone.

* Germany's market was weakened by the fall in Paris and the export-punishing rise in the euro but with continued support coming from feed wheat demand in parts of the country.

* Standard bread-quality milling wheat for February delivery in Hamburg was offered for sale down one euro at 208 euros a tonne with buyers at around 207 euros.

* Strong demand from animal feed makers was once more keeping feed wheat prices around milling wheat in parts of the country, a pattern seen for the last two weeks.

* Feed wheat for nearby delivery in the South Oldenburg market near the Netherlands was offered for sale exactly around milling wheat levels at 208 euros a tonne with buyers around 207 euros. * "Short covering by the feed industry remains firm but not as strong as in past days when feed wheat prices were sometimes above milling wheat," another trader said.

* Milling wheat in regions close to South Oldenburg is being sold as feed, traders said. They said Russian and Ukrainian feed grain prices are firm and some feed grain demand is being switched back to the EU.

* Spain has imported some long-awaited wheat under a special EU quota from Brazil - an unusual origin - and more is expected next month, port and trade sources said.

* Prompt feed wheat in top grains port Tarragona was last quoted at 214-218 euros a tonne, up about 1 euro since Monday.

* Prices have risen some 18 euros since Dec. 20, which dealers say explains lack of buying interest amongst hard-pressed livestock farmers facing a new recession in Spain.

* An estimated 106,000 tonnes has been imported into Tarragona in January under the EU's tariff rate quota (TRQ) scheme -- mainly from Ukraine -- as well as 40,000 from Denmark.

* Wheat prices in Italy, a major grain importer in Europe, were little changed from Thursday and largely flat on the week with tight local supplies enough to meet modest milling demand, traders said.

* Bread quality soft wheat stable at about 215-218 euros a tonne for prompt delivery in northern Italy, without delivery charges, which was in line with prices set at a key weekly session of Bologna's cereals bourse on Thursday.

* May rapeseed was down 0.75 euros or 0.17 percent at 444.00 euros. February stayed in positive territory, up 1.25 euros or 0.27 percent at 466.25 euros, as operators continued to cover themselves before the contract's expiry on Jan. 31.

Copyright Reuters, 2012