Paris wheat steady on brisk overseas demand, strike impact weighed
Paris wheat futures edged higher on Friday, steadying after a pullback in the previous session, as sustained export demand underpinned global prices while traders waited to see the impact of labour strikes on French shipments.
March milling wheat on the Paris-based Euronext exchange settled up 1.00 euro, or 0.5%, at 194.00 euros ($215.17) a tonne.
The contract had climbed to 196.25 euros on Wednesday, its highest level since August 2018 and the highest spot price since last February.
But chart resistance at 195-196 euros and broad losses in Chicago grain futures on Thursday, fuelled by scepticism over the agricultural part of a U.S.-Chinese trade deal, capped gains in Paris, traders said.
Bigger-than-expected weekly U.S. wheat export sales and a run of tenders by import countries have underscored brisk overseas demand.
In France, logistical bottlenecks caused by strikes over pension reform contributed to a rise in physical premiums earlier this month.
But reluctance among buyers to pay recent levels, increased selling by farmers and the risk that France could lose export sales caused premiums to ease from the middle of the week, traders said.
Some traders have pointed to export loadings already being switched from France to Germany, while others have said these reflected previously arranged sales and that switching was more a risk going forward.
French ports were operating on Friday after being at a virtual standstill from Tuesday to Thursday due to a dockers’ strike.
However, industrial action by tug-boat workers was preventing loaded ships from leaving ports on Friday, port service firms said.
Senalia, the largest grain terminal operator at Rouen port, said it hoped to start getting vessels out from this weekend ahead of a further port strike called for Jan. 22-24.
While freight train services were starting to resume after month-old rail strikes, incoming barges and lorries were being blocked by protesting workers, Alain Charvillat, Senalia’s head of grain exports, said.
“As soon as these strikes are over, we are going to have a problem of stock levels,” he said, noting Senalia had around 100,000 tonnes of grain in store compared with about 250,00-300,000 tonnes typically for the time of year.
For next summer’s harvest, a survey by market analysts Sigma Conseil estimated the soft wheat area in France would be down 10% from last year after a rain-plagued sowing season.
The market has been anticipating a sharp drop in wheat area in France and also in Britain due to heavy rain, although traders say the impact on prices could be limited if top wheat exporter Russia harvests a big crop following a successful sowing campaign.
Source: Reuters (Reporting by Gus Trompiz in Paris; Editing by Kirsten Donovan)