In Commodity News 11/01/2016
European wheat futures rose on Friday to recover from a four-month low in step with a short-covering rally in Chicago, but market sentiment remained bearish given an uncertain export outlook and hefty grain stocks.
The run-up to a clutch of crop reports to be released on Jan. 12 by the U.S. Department of Agriculture (USDA) was encouraging some investors to square positions after building up large short bets on wheat, dealers said.
“The world feels long of wheat and although the U.S. hedge funds remain short, there appears to be little forcing the hand of buyers at this moment of time,” UK merchant Frontier Agriculture said in a market note.
March milling wheat on the Paris-based Euronext was up 2.00 euros, or 1.2 percent, at 171.50 euros a tonne by 1702 GMT as the contract pulled away from a low of 168.75 euros touched on Thursday.
Moves by top wheat importer Egypt to toughen import requirements has clouded the export outlook for France at a time when exporters are facing stiff competition from Black Sea and Argentina origins.
Silo operator Senalia said it plans to restrict its intake of grain at Rouen port in June to free up storage space before the summer harvest, in response to lagging wheat exports that could leave France with 5 million tonnes in carryover stocks.
French soft wheat exports outside the EU in the July-November period were down 6 percent on the year-earlier period, while total exports including intra-EU trade were down 22 percent, customs data showed.
May feed wheat in London rose 1.1 percent to 115.50 pounds a tonne, rebounding from a contract low of 113.75 pounds set on both Wednesday and Thursday.
German cash premiums in Hamburg were weaker on increased selling interest while the return of water levels on the river Rhine to allow normal shipping was seen as a relief.
Standard wheat with 12 percent protein content for January delivery was offered for sale at 0.5 euro under the Paris March contract against 0.5 euro over on Thursday. Buyers were offering 1.0 euro under Paris.
“There is some more willingness to sell with temperatures rising after the recent cold snap in Germany and the danger of frost damage receding,” one German trader said.
“Farmers are believed to have large unsold wheat stocks from the 2015 crop. Decisions will have to be made about when to clear out space for the new crop and selling pressure could develop if the upcoming crop looks large.”
Source: Reuters (Reporting by Nigel Hunt in London, Gus Trompiz in Paris and Michael Hogan in Hamburg; editing by David Clarke)
