EU wheat reaches new 5-month low due to Black Sea pressure
Euronext wheat prices fell to their lowest in five months due to a strong euro and cheaper Black Sea wheat supplies. The December wheat position dropped 1.9% to €212 per metric tonne, with front-month September futures also falling. The strong euro is hindering export prospects from Western Europe, while aggressive pricing from Russia, despite lower-than-expected shipment volumes, continues to dominate export demand. Early-season exports in Western Europe have been slow, raising concerns about inadequate demand to cover the harvest surplus.
Euronext Wheat prices fell on Wednesday to their lowest level in five months as the strength of the euro and cheaper Black Sea wheat supplies pushed down prices.
The December wheat position, which was the most active on Paris’ Euronext exchange, fell 1.9% to 212.00 Euros ($236.27) per metric tonne by 1610 GMT.
The contract dropped earlier to 211.50 euro, its lowest level since March 15, after breaking chart support at 215 euros which had held during previous five-month highs this week.
The front-month September futures fell 2.1% to 199.75 Euros, after hitting a low of 199.25 Euros in five months as it tried to test the psychological 200-euro ceiling.
Chicago wheat prices also declined despite the weakening dollar.
The exchange rate continues to affect the export prospects of wheat from western Europe.
Tunisia’s Wednesday wheat import auction highlighted the competitiveness and quality of Black Sea origins. These were expected to fulfill the 75,000 metric tons Tunisia had ordered.
One German trader stated that the strength of the euro is disappointing, especially at a moment when exporters from the Black Sea are offering such low prices and demand abroad is slack.
While overall wheat shipment volume from Russia is running lower than expected, Russian grain is still offered aggressively at low prices and Russia is winning the majority of business for spot near-by export demand.
The price of Russian 12.5% Protein for the September Black Sea shipment is around $217-220 per ton FOB.
Oksana LUT, the Agriculture Minister, said that Russia’s wheat harvest may be less than expected due to adverse weather conditions. She did not change her government’s estimate of 86,000,000 tons, however.
The attention of the French and German farmers has been distracted by the large harvests expected in Russia, Ukraine and North America.
Early-season exports have been slow in Western Europe, raising concerns that the demand could be inadequate to cover even a smaller harvest surplus.
Maxence Devillers, Argus analyst, said that prices could still fall if demand doesn’t pick up.
Data released on Wednesday showed that financial investors increased their net short positions in Euronext Wheat last week. Reporting by Guilherme Trompiz and Michael Hogan, both in Hamburg. Editing by Jonathan Oatis.
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