European wheat futures fall to three-week low

September 17, 2013


European wheat futures fell on Monday to a three-week low, pressured by a rise in the euro against the dollar and pre-weekend losses on the US market. Paris futures continued to hold a recent support zone, however, underpinned by good export demand and a steadying of wheat and corn prices in Chicago. November milling wheat on the Paris Euronext market fell as low as 184.75 euros a tonne, a level last seen on August 23.

But prices partly recovered to hover in the 185-186 euro range that has acted as a floor this month as the market consolidated below 192 euros. If this level were broken, the market should still find a firm technical and psychological footing around 180 euros, dealers said. By 1249 GMT, the November contract was down 0.75 euro or 0.40 percent at 185.50 euros.

Paris futures were factoring in a rise in the euro to a 2-1/2-week high against a broadly weaker dollar, plus a sharp fall in US wheat and corn on Friday. “While global wheat supply appears balanced, other markets are driving its movements,” French consultancy Agritel said in a note, stressing an outlook for ample supply on the maize (corn) market. The US Department of Agriculture surprised the market on Thursday by raising its US corn crop forecast to a new record, despite recent unfavourable weather, underscoring the outlook for a sharp rebound in world supply.

Healthy export demand was still providing support for wheat and countering pressure from a large European harvest and bearishness in corn. European Union data on Thursday showed the highest weekly volume of wheat export licences so far this season at 715,000 tonnes. It put the volume so far this season ahead of that seen at the same stage in a record 2008/09 campaign. Doubts over wheat quality in Russia, a major export rival, also reinforced prospects for EU wheat.

Feed wheat futures in London declined slightly, with November off 0.25 pound or 0.16 percent at 152.25 pounds. The market’s focus was turning from the near-completed 2013 harvest to the autumn plantings campaign. “With 98 percent of UK wheat now cut, the race is on to get next year’s planted. Rain in the past week has generally helped ground conditions and wheat is already being planted as far north as Lincolnshire in good conditions,” merchant Frontier said in a market note. Courtesy Reuters

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