Benchmark European wheat prices extended losses on Thursday to hit their lowest in almost five months as a rally in the euro dented export hopes and reinforced fears of hefty stocks at the end of the season. The euro's strength offset potential support from a strong weekly volume of European Union export certificates. March milling wheat on Euronext settled 0.50 euro lower at 158.75 euros a tonne. It earlier fell to 158.00 euros, a new contract low and the weakest level for a front-month contract since September 10.
The contract was testing the lower end of a bearish channel on price charts and further losses could accelerate the downward movement, dealers said. "Technical price signals remain bearish and fundamentally only a serious weather problem could change the outlook. But for the moment there is no major risk," one futures dealer said.
"The rise in the euro has curbed the positive effect of the decent level of export certificates in the EU," he added. The euro reached its highest level against the dollar in over three months, as fading expectations of interest rate rises continued to push the US currency lower. Algeria booked 840,000 tonnes of wheat in a tender this week, according to traders who underlined however a very low sale price of $178 a tonne, cost and freight, that was below current market levels in France.
The EU awarded 786,000 tonnes of weekly soft wheat export licenses, one of the biggest volumes this season, but the total so far in 2015/16 was 15 percent below the year-earlier level. Traders were also cautious about the situation in top wheat buyer Egypt, pending further clarification of its import rules after the country reversed a decision to reject grain with any traces of fungus ergot.
The market was also awaiting a final decision by Russia on whether it will modify an export tax on wheat. In Germany, standard wheat with 12 percent protein content for February delivery was offered for sale at 2.5 euros under the Paris March contract against 2 euros under on Wednesday.
Buyers were offering 3.5 euros under Paris against 3 euros under on Wednesday. In Poland, prices dropped in the last week following falls in Paris and after unfavourable exchange rate movements. Exporters were offering to buy 12.5 percent protein wheat at around 675 zlotys (152.8 euros) a tonne for February delivery to Polish ports, down 20 zlotys on the week. "One vessel is loading 20,000 tonnes in the port of Szczecin another two are loading 42,000 tonnes and 63,000 tonnes in Gdynia, but destinations are unclear," one Polish trader said.
Comments
Comments are closed.