Paris wheat falls sharply on US drop, competition from Russia
European wheat futures in Paris fell sharply on Monday, pushed down by a steep drop in U.S. wheat in Chicago and cheap prices offered in export markets by Russian wheat as a new purchase tender by key EU customer Algeria was issued.
Front-month September milling wheat BL2c1 on the Paris-based Euronext exchange was down 3.3% at 239.50 euros ($264.02) a metric ton at 1501 GMT.
Chicago wheat fell 4.4% on Monday as forecasts of milder weather in the U.S. Midwest grain belt reduced concerns over heat damage to U.S. crops. Wheat dropped despite worries over Black Sea supplies, with relief that there were no reports of major Russian attacks on Ukrainian grain infrastructure over the weekend.
“There’s a lot of pressure on the U.S. market with the improving weather outlook for August in the corn and soy belt,” one futures trader said. “You also have Russian wheat that’s more competitive than French in Algeria and even Morocco.”
Key EU customer Algeria on Monday issued the first major wheat import tender from a big Middle East/North African buyer since Russia left Ukraine’s safe shipping deal.
Traders said the bullish impact of the tender was tempered by disappointment that Algeria was looking for October shipment, skipping the September shipment position. Algeria’s last large purchase was for August shipment with only a minor purchase spoken of for September.
Morocco has modified its wheat import subsidy scheme to offer the same rate for all supply origins, a step that traders say could encourage some shipments from top exporter Russia.
Repeated rain is delaying the early stages of Germany’s wheat harvest, traders said. But rain has raised water levels on the Rhine in Germany, with much of it back or close to normal levels, allowing cargo vessels to sail fully loaded on the river.
Source: Reuters (Reporting by Michael Hogan in Hamburg and Gus Trompiz in Paris; editing by Paul Simao)
