Euronext wheat futures on Thursday hit their lowest in over six months in an unexpectedly sharp slide fuelled by technical selling and worries that an upturn in demand is coming too late to make up for a slow start to the season. May milling wheat, the most active contract on Paris-based Euronext, settled 3.25 euros, or 1.6 percent, lower at 199.50 euros ($225.34), its weakest level since July 24.
Front-month March ended down 3.00 euros at 198.25 euros. Selling accelerated when the old-crop contracts breached the 200 euro chart floor, with the expiry on Friday of options on March futures adding to heavy trading volumes. A steep fall for Chicago wheat also pressured Euronext, with disappointing US export sales figures weighing on sentiment.
"The price move was brutal and wasn't really expected today when French wheat is looking competitive for exports and with a weaker euro," a Euronext trader said. "The market doesn't think EU exports can reach the volumes being forecast." After being tipped by traders to claim part of a 100,000 tonne purchase by Tunisia on Wednesday, French wheat was seen as well placed to be chosen for the bulk of a 600,000 tonne purchase by Algeria in a separate tender on Thursday.
However, prices reported in the Algerian tender were seen as aggressive and tempered reaction to a possible French success. Strategie Grains analysts increased slightly their forecast of European Union soft wheat exports in 2018/19 to 18.7 million tonnes, citing the increased competitiveness of EU origins as availability dwindles in the Black Sea region. But it maintained its forecast for a 15 percent rebound in EU soft wheat production this year, after a drought-hit crop last year, adding to sentiment that the market will face supply pressure in the coming months.
In Germany, cash premiums in Hamburg were little changed, with sellers continuing to hope for a recovery in exports. Standard bread wheat with 12 percent protein for February delivery in Hamburg was offered for sale at about 7.0 euros over Paris March.
Feed wheat in the South Oldenburg market for February/March delivery was offered for sale above milling wheat, down 1 euro at around 213 euros a tonne, with buyers seeking 210 euros. Feed grain prices have been high since last summer's drought and heatwave damaged German fodder crops.
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