EU wheat consolidates after 1-month high as export prospects weighed

Euronext wheat futures were little changed on Friday, holding close to a one-month high touched a day earlier, as traders assessed export prospects of a flurry of tenders this week by importing countries.

Activity was thin with some French traders away at a grain industry gathering near Paris while market participants from across Europe were also attending a Baltic grain event in Copenhagen.

December milling wheat on the Paris-based Euronext exchange was 0.25 euro, or 0.2%, lower at 171.50 euros a tonne at 1441 GMT.

The contract remained below Thursday’s one-month high of 172.50 euros as it continued to face chart resistance around 172 euros.

Wheat markets have drawn support this week from a run of purchases by importing countries as well as risks that dry weather will reduce southern hemisphere harvests and hamper northern hemisphere sowing.

Euronext was also underpinned by hopes that Morocco’s launch of its import season next month will generate fresh exports and partly offset a demand gap created by Algeria’s decision to pass over October imports and purchase for November in its latest tender.

Morocco’s confirmation on Thursday that it will cut its customs duty on soft wheat to 35% from 135% from Oct. 1 heralded the start of the country’s annual import campaign as it adjusts to a sharp fall in domestic grain production.

It also announced tenders to buy European Union and U.S. wheat under annual reduced-tariff quota agreements.

“French exporters will be very active on this demand,” consultancy Agritel said in a note, adding cargoes could start leaving France in late September.

However, some traders cautioned that Ukraine, which has been exporting wheat heavily since the start of the season after a bumper harvest, could provide stiff competition for French wheat in Morocco.

In Germany, thin demand domestically and overseas continued to weigh on the market.

“I do not expect Germany to achieve major new export sales to the main Middle Eastern markets until supplies from other exporters start to sell out. Sub-Saharan Africa looks like the main hope for German exports in the near future,” one trader said.

A ship is set to sail from a German port next week with 25,000 tonnes of wheat for Guinea following a ship last week which sailed for South Africa with 55,000 tonnes.

Standard bread wheat with 12% protein for September onwards delivery in Hamburg was offered for sale unchanged at 2.5 euros under Paris December. Buyers were seeking at least 3.0 euros under Paris.

Grain lobby Coceral raised its quarterly estimate of European Union common wheat production 143.3 million tonnes from 140.3 million, confirming a rebound from last year’s poor crop.
Source: Reuters (Reporting by Gus Trompiz and Michael Hogan in Hamburg; Editing by Mark Potter)