Euronext wheat futures fell to contract lows on Tuesday, pressured by a slump in Chicago corn futures that was in turn triggered by a higher than anticipated US crop forecast. However, losses in Paris wheat were limited by the reluctance of some market participants to react to the US data during a holiday period in Europe, as well as the price competitiveness of wheat over corn (maize), traders said.
Benchmark December milling wheat on the Paris-based Euronext exchange settled 1.25 euros, or 0.7%, lower at 171.25 euros ($191.41) a tonne. It earlier fell to a life-of-contract low at 170.75 euros, slightly under a previous low of 171 euros dating from mid-May. Front-month September fell as much as 1.25 euros to set a new contract low of 166.00 euros, below a previous low of 166.75 euros touched on Monday.
In a much-anticipated crop report released shortly before Monday's close in Europe, the US Department of Agriculture (USDA) caught grain markets by surprise with a larger than expected projection of US corn acreage and yield. The estimates sent Chicago corn tumbling by nearly 6% on Monday and then another 3% in US trading on Tuesday.
"Wheat followed corn lower and Matif (Euronext) clearly followed Chicago," one futures dealer said. "But the spread between wheat and corn on Matif is unusually narrow and corn is the crop that looks expensive. That could be a factor that limit the fall for wheat." Wheat and corn prices influence each other as they compete with each other in livestock feed and other industrial uses.
The French cash market was quiet as traders digested the USDA data while many operators were taking vacation around the August 15 public holiday in France. In Germany, traders also assessed the USDA report while monitoring the rain-delayed final stages of the wheat harvest. Standard bread wheat with 12% protein for September onwards delivery in Hamburg was offered for sale at 1.75 euros under Paris December against 1.5 euros under on Monday. Buyers were seeking at least 2 euros under.
Traders hoped the harvest could be completed this week. Decent quality was still reported in remaining northern regions despite showers most days. "Quality has fallen slightly after the late rain but I believe we will still get milling standard. I think Schleswig-Holstein will produce more wheat of 11% protein content, about the normal French standard," one trader said. "Mecklenburg-Vorpommern should still produce normal German standards of 12-13% protein. Perhaps there will be more blending of supplies than usual."