EU wheat at one-week low as Egypt tender leaves export hangover

Reuters , Friday 11 Jan 2019

File Photo: Wheat (Photo: Reuters)

Euronext wheat futures slipped to a one-week low on Thursday in line with Chicago prices after a clean sweep for Russian wheat in an Egyptian tender dampened hopes for EU and U.S. exports.

March milling wheat, the most active contract on the Paris-based Euronext exchange, settled 1.75 euros or 0.9 percent down at 203.50 euros ($234.15) a tonne, its lowest since Jan. 3.

Egypt’s state grain buyer bought 415,000 tonnes of Russian wheat in an tender that ended late on Wednesday, tempering recent expectations that Russia was becoming uncompetitive overseas as its export surplus declines.

“Being able to buy 415,000 tonnes of Russian wheat in one snap overnight tender with traders having only a couple of hours to gather their offers does not sound like sold out supplies to me,” a German trader said.

“I fear export competition for the west EU from Russia is far from over.”

European Union soft wheat exports are running 25 percent below the level seen last season, while top EU supplier France has been dependent on sales on Algeria, which has absorbed 80 percent of its shipments outside the EU so far in 2018/19.

“The volume and prices offered yesterday for Russian wheat in Egypt show that there is still no significant improvement in the export prospects for EU wheat in the second half of the season,” a French trader said.

“Apart from Algeria, traders with long positions are struggling to find export markets for French wheat.”

France’s farming agency on Wednesday trimmed its forecast for wheat exports outside the EU this season, cautioning that competition would continue to be tough.

In Germany, feed wheat prices remained high as farmers were being compelled to buy fodder for their animals after last summer’s drought.

Feed wheat in the South Oldenburg market for January onwards delivery was offered for sale above milling wheat at around 218 euros a tonne with buyers at around 216 euros.

That was above milling wheat in Hamburg, where standard bread wheat with 12 percent protein for January delivery was offered for sale unchanged at 3 euros over Paris March.

A drop in forage supplies due to last year’s drought has boosted imports, and EU data showed traders had scooped up the entire volume of 1.175 million tonnes of duty-free Ukrainian maize available for 2019 under the EU quota scheme.

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