In Commodity News 19/09/2016
Western European wheat markets were steady on Friday as reluctant selling by farmers offset pressure from hefty global supplies and uncertainty created over import terms in Egypt, the world’s biggest wheat buyer.
December milling wheat on Paris-based Euronext was unchanged on the day at 158.75 euros a tonne by 1452 GMT.
The Euronext benchmark was set to post a small 0.50 euro gain over the week after recovering from a two-month low of 157.25 euros at the start of the week.
CME Group’s December EU wheat was up 0.50 euro, or 0.3 percent, at 160.50 euros a tonne, as it neared the end of its first week of trading.
“The European wheat market is lacking real direction. We’ve had the confirmation of the bad harvest and reduced export outlook in France, so the next supply factor could now be the Australian harvest,” Alexandre Boy of consultancy Agritel said.
“In the meantime, Egypt could be the main focus.”
Egypt was expected to cancel its second consecutive international wheat tender on Friday after it failed to receive any offers from suppliers due to its strict ban on ergot fungus, traders said.
The disruption to trade with Egypt comes as major exporters, with the exception of France, have large crops to ship.
“The continued problem in Egypt with ergot means Egypt’s expected demand is absent for the foreseeable future. Wheat shipments rejected by Egypt will also have to be resold elsewhere which could also put downward pressure on prices,” a German trader said.
The European market has also been adjusting to CME’s new EU wheat futures.
The contract’s first week was seen as successful, with at least several hundred lots trading each day and several delivery months active. But traders said market makers were likely boosting initial volumes and the key would be for open interest to grow over time, notably through the development of cash market premiums indexed on the CME futures.
German cash market premiums in Hamburg were little changed.
Standard wheat with 12 percent protein content for September delivery in Hamburg was offered for sale unchanged at 1 euro over the Paris December contract. Buyers were seeking 0.5 euro over Paris.
“Farmers are unwilling sellers at current low price levels while consumers expect even more price falls in coming weeks so it is a difficult market,” the German trader said.
European wheat markets also drew some support from a slight rise in Chicago wheat and a sharp drop in the euro against the dollar.
Source: Reuters (Reporting by Gus Trompiz in Paris and Michael Hogan in Hamburg, editing by William Hardy)
