Wheat prices in western Europe were slightly lower on Tuesday as a monthly report issued by the US Department of Agriculture confirmed ample global supplies. A sharp decline in front-month March futures on Euronext, which expired on Tuesday, also weighed on prices. May milling wheat, the benchmark on Euronext's established No 2 wheat contract, settled down 1.25 euros or 0.7 percent at 186.00 euros a tonne.
The expiring March contract ended more than 3 percent lower at 178.25 euros a tonne. A cut to US ending stocks in the US Department of Agriculture's supply/demand report lent some support to Chicago futures, but a rising dollar and large global wheat supplies kept a lid on the market. "The USDA's March report is overall in line with expectations and without surprises, so it is probably neutral for wheat markets," consultancy Agritel said in a note.
"At the same time, EU exports are revised up slightly to 31.5 million tonnes, with the weakness of the euro likely helping the bloc win some extra demand overseas." The holding of a support floor on Friday, when the contract touched a one-week low of 184.00 euros, encouraged the bounce. But the main impetus came from Chicago where US futures climbed 2 percent to pull away from contract lows. Euronext's new No 3 premium wheat futures saw trade in the December 2015 position, ending a dearth of activity since last week's launch.
German old crop cash wheat premiums in Hamburg were weaker in thin demand ahead of the USDA report, published towards the end of the German trading day. Standard wheat with 12 percent protein content for delivery in Hamburg in March was offered for sale at a premium of 4 euros over the Paris May contract against 5 euros over on Monday. Buyers were offering 3.50 euros over.
"The weaker euro is fantastic for EU exports but we have large supplies still to sell and a big new crop looming with the winter so mild so far, so this is dampening the euphoria from the weaker euro," one German trader said. "There are good old crop volumes available for sale in Germany and sales pressure from Poland, the Czech Republic and Slovakia." New crop was offered for sale at 6 euros over the old Euronext No 2 contract. "Trade in the new Euronext No 3 contract is disappointing and is too thin to be able to start serious discussions about using it for new crop contracts," one German trader added.
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