Western European wheat prices eased on Friday in subdued trading as the market waited to have a clearer picture of the harvest after reports this week of poor wheat quality in France. November milling wheat on the Euronext market was down 0.75 euros or 0.4 percent at 180.25 euros a tonne by 1551 GMT after trading in a narrow range throughout the session.
The contract had risen sharply during Thursday's session, touching its highest in almost a week at 182.75 euros, with some dealers saying buyers were turning to Euronext for milling quality because of scarce offers on the physical market. Some very poor quality readings so far in north-east France have raised the risk that more of the crop than usual could be of animal-feed grade. That led French buyers to cover milling needs in Germany and Poland this week, although traders in Germany said that interest had subsided by Friday. But with harvesting only getting going in major grain belts north of Paris, traders said next week would bring a firmer indication of the quality trend in France.
"There are some technical adjustments today, encouraged by Chicago consolidating around the $5.30 level," one Euronext dealer said. "We'll have to see what quality there is in the wheat that's left to harvest." Some showers are forecast in the week ahead in northern France along with sunny, warm weather. The soft wheat harvest in France gathered pace last week, with 44 percent of the crop area harvested by July 21, up from 5 percent a week earlier, data from farm office FranceAgriMer showed on Friday. However, heavy rain last weekend is expected to have stalled field work in the early part of this week.
Dealers said there remained uncertainty about how harvest quality would affect the market given the possibility that Euronext's two delivery silos for this year's crop will set differing quality requirements. The prospect that a large portion of the European Union wheat harvest could be downgraded to feed after a wet July may exacerbate price pressured in view of big expected crops of rival feed grains barley and especially maize.
The European Commission on Friday raised its estimate of 2014 maize production in the European Union to 70.8 million tonnes from 70.4 million last month, now up 8.4 percent on 2013. It left unchanged its estimate for soft wheat at 137.5 million tonnes, up 1.9 percent on last year. German cash wheat premiums were weaker as recent French purchasing faded away and the market focused on Germany's wheat harvest, now starting on a wide scale where weather allows.
Standard new crop wheat with 12 percent protein content for delivery in Hamburg from September was offered for sale at a premium of 6.5 euros over the Paris November contract, compared with 7 euros over on Thursday. Buyers were offering 5.5 euros over Paris against 6 euros over on Thursday. "The nearby demand we saw earlier in the week because of French buying in Hamburg is now dropping off, and attention is on the harvest, which is set to get going on a broad scale if the weather permits," one German trader said.
"The German harvest looks settled in volume terms. Now we are waiting to see what is the final quality, with the overall picture still unclear because of repeated rain in recent weeks, which may have reduced some German wheat to only feed standard," the trader added.
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