09-08-2016

EU wheat drifts down with Chicago as harvest pace stays slow

wheat

Euronext wheat futures eased on Monday, curbed by weakness in Chicago, as the market awaited a clearer picture of the extent of weather damage in a slow-moving harvest in western Europe.

Front-month September milling wheat on the Paris-based Euronext exchange settled down 1.00 euro or 0.6 percent at 165.50 euros a tonne, while the December contract also settled 1.00 euro weaker at 169.00 euros.

Chicago wheat turned lower during U.S. trading in a hesitant mood as investors started to look ahead to crop forecasts on Friday from the U.S. Department of Agriculture (USDA).

“We lost some earlier support after Chicago gave up its gains,” one French trader said. “This week is likely to be a wait-and-see one before the USDA report.”

The European market has been consolidating in the past week after traders factored in very poor French harvest yields alongside bumper crops in the Black Sea region.

France’s farm ministry on Friday slashed its estimate of the soft wheat yield in the ongoing harvest to a 30-year low.

Rain delays to field work in northern France and Germany have deprived traders of fresh harvest news.

Drier weekend weather in northern French grain belts allowed field work to resume but harvesting was expected to slow again this week with unsettled weather returning from Monday, traders said.

German cash market premiums in Hamburg were little changed, with market participants waiting for more indications about the rain-slowed harvest that has raised concern about late quality damage to crops.
Standard wheat with 12 percent protein content for September delivery was offered for sale unchanged from Friday at 0.5 euro over the Paris December contract. Buyers were seeking 0.5 euro under Paris.

Showers over the weekend and on Monday again interrupted Germany’s harvest, continuing delays seen in the past two weeks, and more rain is forecast this week up to Friday.

“We are seeing repeated local showers, rather than prolonged rainfall, which can be shaken off by wheat. About six years ago we had a similar pattern of repeated showers during harvest time but Germany was still able to achieve a good harvest. But if the rain continues for another two weeks I think a lot of people will get worried,” one German trader said.

“Currently we are not seeing indications of problems with (quality standard) Hagberg falling numbers, so at the moment the market is taking a pretty relaxed view of the persistent rain.”

Source: Reuters

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