In Commodity News 01/02/2016
European wheat futures were little changed on Friday, holding above recent contract lows, as traders expected Russia to leave an export tax unchanged after a review that left wheat markets on edge.
The European market was also underpinned by a sharp fall in the euro against the dollar, and broad gains in oil and share prices, although ample wheat supplies in Europe and worldwide prevented a rebound.
Front-month March on the Euronext milling wheat futures market <0#BL2:> edged down 0.50 euro to 164.00 euros a tonne by 1701 GMT, hovering above a contract low of 163.25 euros hit earlier this month.
“We’ve reached pretty low levels, plus it’s Friday and the euro is down so there is a bit of short-covering, but there isn’t much weight behind it,” one futures dealer said.
The Euronext March contract was set to end January down more than 5 percent, reflecting bearish sentiment about hefty stocks and tepid exports.
Industry sources said Russia is likely to leave its grain export rules unchanged after a meeting on Friday that followed days of speculation as to whether the major exporter could tighten or ease a wheat export tax.
The European Commission reduced its monthly forecast for European Union soft wheat stocks at the end of 2015/16, but these would still be up sharply from last season.
In France, the prospect of large end-of-season stocks weighed on prices for this summer’s new crop.
“Given the big carryover stocks, we are going to have to export from the word go in July. The extremely low new-crop cash prices are giving that signal,” one cash broker said.
German cash premiums in Hamburg were little changed, with an expected pick-up in German shipments in February lending some support.
“Premiums now seem to be stabilising and are receiving some moderate support as larger lineups of ships to load wheat in German ports in February are developing,” one trader said.
“Following a slow start to Germany’s export season we could see more action here, the Baltic States are not such aggressive sellers as they were in the past.”
Traders said one exporter had taken positions in March/June delivery wheat from Germany, Baltic States and Poland in the expectation Saudi Arabia could issue a purchase tender soon.
