In Commodity News 29/02/2016
European wheat futures were mired near recent contract lows on Friday, as a rebound in Chicago petered out and concern about high stocks curbed enthusiasm about an upturn in export demand.
But German cash premiums were stronger on hopes a large tender being held by Saudi Arabia will bring some sales for German wheat.
May milling wheat, the most active contract on the Paris-based Euronext exchange, was unchanged on the day at 153.50 euros a tonne at 1701 GMT.
It was trading near Wednesday’s contract low of 152.75 euros that also marked the weakest level for a benchmark contract since September 2014.
Chicago wheat futures turned lower as a rebound from 5-1/2 year lows stalled.
“There aren’t many people in the market who are bullish,” one futures dealer said. “There is wheat everywhere. Even when the Russians aren’t too competitive, you’ve got Argentine or Romanian wheat to compete against.”
This week’s price lows had prompted several importing countries to launch tenders.
But reaction to Egypt’s purchase of 60,000 tonnes of French wheat in a tender on Thursday was subdued as Egypt also bought 240,000 tonnes from rival exporters Argentina, Romania and Ukraine.
France is also seeing a run of export sales to Morocco, but traders said volumes were not enough to change a bearish supply picture as France is forecast to have its biggest end-of-season wheat stocks in 17 years.
Favourable conditions for wheat crops in France and elsewhere in the European Union were also contributing to the bearish tone.
The share of soft wheat crops in France rated as good or excellent was unchanged in the week to Feb. 22 at 94 percent, the highest score for the period in the past five years, farm office FranceAgriMer said.
In Germany, standard wheat with 12 percent protein content for March delivery was offered for sale at 2 euros under the Paris May contract against 3 euros under on Thursday. Buyers were seeking 3 euros under Paris.
“There is optimism that part of the Saudi purchase will be placed in Germany,” one German trader said.
“One of the major multinational export houses has recently built up a large long position in 12.5 percent protein wheat in Germany, Poland and the Baltic States which means wheat from these areas could be in a good position to win the Saudi business.”
Traders also said loadings in German ports were starting to gather speed, with 60,000 tonnes of wheat due to load for Turkey and 40,000 tonnes for South Africa joining other ships loading or set to load wheat for Kenya, Mozambique, Oman, Cuba and Mali.
Source: Reuters (Reporting by Gus Trompiz in Paris and Michael Hogan in Hamburg, editing by David Evans)
