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EU wheat prices set 7-week high before gains erased

EU wheat prices set 7-week high before gains erasedLONDON: European Union wheat prices fell back from a 7-week high to little-changed levels on Tuesday, after a setback in US futures.

“The market is having a breather today after a wave of buying that was a bit excessive,” one futures dealer said.

“The weather market is still tentative and we’re seeing a lull in new export business with the long wait for Egypt to buy again.” May milling wheat, the benchmark on Euronext’s established No. 2 wheat contract, was unchanged at 192.75 euros a tonne at 1703 GMT.

It earlier touched its highest since Jan. 27 at 194.25 euros, adding to a late rally on Monday.

CBOT May wheat was off 1.3 percent at $ 5.07-1/2 a bushel after earlier climbing to a two-week high of $ 5.18 buoyed by concerns that dry weather could cut US production.

The European market has been underpinned by brisk exports this season, helped by a slide in the euro to 12-year lows against the dollar.

But the drop-off in new demand, illustrated by an absence of regular international tenders by Egypt in the past month, plus a recovery in the euro this week has tempered export sentiment.

“The weaker euro this month is very positive for exports but people are waiting to see if this results in more export sales at a time when low crude oil prices are cutting the purchasing power of a lot of the main Arab wheat importers,” one German trader said. “But the market remains supported by the large export programme being shipped through German ports.”

Traders estimate a hefty 800,000 to 1 million tonnes of wheat will be exported by Germany in March following around 800,000 tonnes in February.

German old crop cash wheat premiums in Hamburg were marked down as buyers declined to follow the initial rise in Paris. Standard wheat with 12 percent protein content for delivery in Hamburg in April was offered for sale at a premium of 3 euros over the Paris May contract against 4.5 euros on Monday.

Buyers were offering 2.5 euros over. “Nearby demand is thin with mills and feed makers buying hand-to-mouth and purchasers are resisting price rises,” one German trader said.

Copyright Reuters, 2015

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