Thursday, 12 March 2015 02:18
HAMBURG: European wheat futures rose to a one-week high on Wednesday, buoyed by gains on the US market and a fresh slide in the euro which reinforced the export competitiveness of French and German wheat.
Paris May milling wheat, the benchmark on Euronext’s established No. 2 wheat contract, was up 1.75 euros or 0.9 percent at 187.75 euros a tonne by 1701 GMT after earlier hitting a one-week high of 189.00 euros.
Chicago futures were supported by an unexpected cut to US wheat stocks forecasts in a US Department of Agriculture (USDA) report on Tuesday and concerns about dry weather in the United States.
“Chicago is rising with some short-covering after the USDA report and the euro-dollar rate is heading towards parity,” one European futures dealer said.
The euro slipped to a fresh 12-year low against the dollar, making grain from euro zone producers such as France and Germany cheaper in dollar-priced export markets.
The USDA underlined brisk EU exports this season by raising its forecast of EU wheat exports in the current 2014/15 season to 31.5 million tonnes from 31 million tonnes previously.
But traders said export demand for wheat remained generally thin with some importers holding enough supplies for this season, with demand currently more focused in old-crop maize and new-crop barley.
Euronext’s new No. 3 premium wheat futures had not seen any trade by 1701 GMT, confirming a slow start for the product launched on March 2.
Despite thin trading so far, Euronext said on Tuesday it still planned to drop its established No. 2 wheat futures ahead of the 2018 harvest in favour of the new No. 3 contract.
German old crop cash wheat premiums in Hamburg were little changed, with the weak euro underpinning.
Standard wheat with 12 percent protein content for delivery in Hamburg in March was offered for sale at an unchanged premium of 4 euros over the Paris May contract. Buyers were offering 3 euros over.
“The weaker euro is very positive for EU exports but large supplies still need to be exported to prevent burdensome inventories at the end of the season,” one German trader said. “There are brisk sales offers in parts of the country including Lower Saxony (in north Germany), showing large supplies are still available.”
Some high quality wheat with 14 and 13 percent protein content was purchased from Poland in relatively small volumes by German mills this week, illustrating continued competition from neighbouring suppliers in Germany’s domestic market, traders said.
Mild weather continued throughout Germany, raising optimism wheat could come through the winter without major frost damage.
Copyright Reuters, 2015
