European wheat futures fell on Friday as new US government crop estimates failed to generate further upward impetus after Paris surged to a four-week high this week. Front-month September milling wheat on the Paris-based Euronext exchange unofficially closed down 1.0 euro or 0.5 percent at 169.25 euros a tonne. The contract had been down 0.25 euro just before the US Department of Agriculture's (USDA) world crop supply and demand report was issued at 1600 GMT.
The USDA raised its forecast for US winter wheat despite a snowstorm in May that analysts worried had severely damaged the crop in Kansas, the top producing US state. "The USDA report did not have any major surprises and US markets in Chicago were also calm after publication," one German trader said. "The US wheat crop outlook remains good."
The Paris September contract was consolidating near Thursday's peak of 170.50 euros, the highest since May 12, reached on concern about bad weather stressing crops in the United States. Rising prices this week had encouraged some sales by grain cooperatives in France, dealers said. French producers have been reluctant to make forward sales, mindful of last year's dire harvest in France, but improving crop conditions after recent rainfall could prompt more selling.
Crop data from farm agency FranceAgriMer on Friday confirmed a general stabilising in wheat conditions. German cash milling wheat premiums in Hamburg were firm on hopes German supplies will be selected in a large tender from Saudi Arabia to be negotiated over the weekend and continued demand by animal feed makers for wheat. Standard wheat with 12 percent protein content for June delivery in Hamburg was offered for sale at 1 euro over the Paris December contract against level Paris on Thursday. Buyers were seeking 0.5 euro under Paris.
"There are expectations that some EU wheat will be selected by Saudi Arabia in its new tender for 770,000 tonnes which closes on Friday." one German trader said. "With supplies in Poland tight after their recent heavy export programme, German and other Baltic Sea region wheat may win part of the Saudi business." Results of the Saudi tender are expected on Monday. High feed wheat prices also meant milling wheat was being sold as animal feed. Feed wheat for June onwards delivery in Germany's South Oldenburg feed wheat market was again quoted well over Hamburg milling wheat at around 180 euros a tonne.
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