EU wheat ends week lower as high supply tempers weather worries

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Euronext wheat eased as a U.S. government forecast projecting record global supplies took attention away from weather concerns that had fuelled a recent rally.

A firm euro and a sharp fall in Chicago futures also weighed on the market.

May milling wheat on Paris-based Euronext settled down 1.25 euros, or 0.8 percent, at 163.25 euros a tonne, although dealers said chart support helped it hold above Thursday’s two-week low of 163.00 euros.

Over the week, it was down 1.50 euros from last Friday’s close, easing further from a 3-1/2 month high of 169.00 euros struck on March 1.

In closely watched crop forecasts released near the end of European trading on Thursday, the U.S. Department of Agriculture (USDA) raised its outlook for global wheat stocks at the end of 2017/18 to a new record.

“The increase in world wheat stocks to a record high by the USDA is weighing more on the market than the drought in the U.S. Plains that was already priced in,” a futures trader said.

The USDA’s revisions for wheat also included reductions to expected U.S. and European Union exports, and another upgrade to Russian exports, underlining the dominant position of Russia in wheat markets this season.

In France, traders noted nonetheless increased short-term export demand, illustrated by a busier loading lineup and signs that Argentine competition in Algeria, France’s core export market, was fading.

Grain lobby Coceral forecast soft wheat production in the European Union would fall by 1 million tonnes this year to 140.5 million after heavy autumn rain forced farmers in some northern countries to cut back on sowing.

The publication of weekly EU grain export data was still pending after being postponed on Thursday by the European Commission due to a technical issue.

In France, crop ratings for wheat declined again last week, while spring barley sowing accelerated, data from farming agency FranceAgriMer showed.

In Germany, wheat cash market premiums in Hamburg rose slightly on reduced producer selling, partly as farmers turned to spring field work.

“Weather has warmed up dramatically in Germany following the deep frosts last week and with the ground no longer frozen some overdue field work is being done. Spring grain plantings are also starting in south Germany,” a trader said.

Standard bread wheat with 12 percent protein content for March delivery was offered for sale up 0.5 euro at 3.0 euros over Paris May.

Feed wheat prices in Germany’s South Oldenburg market were again over milling wheat on demand from feed makers, with March onwards delivery offered for sale unchanged at 174 euros a tonne with buyers seeking 172 euros.
Source: Reuters

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