Paris wheat futures fell on Wednesday as a pause in a US rally deprived the European market of its recent driver while positive crop conditions across Europe also put pressure on prices. Front-month September milling wheat on the Paris-based Euronext exchange settled down 1.25 euros or 0.7% at 175.00 euros ($195.21) a tonne.
The contract had touched its highest in almost seven weeks on Tuesday at 178.25 euros, buoyed by a three-month high for Chicago wheat. The US grain market has surged in the past week amid growing concern that torrential rain will prevent some corn planting and damage some maturing winter wheat crops. Chicago wheat eased on Wednesday while trade in corn was hesitant as there was a lull in short-covering by investment funds. "Pricing in Europe has been based on US factors whereas the crop situation is good in the EU and rival exporters in the Black Sea region," a futures dealer said.
"If there is another wave of buying on the market, it won't be until the next weekly US crop progress report which will confirm or not the seriousness of the US problem." The last weekly update from the US Department of Agriculture (USDA) on Monday showed a lower-than-expected 49% of the US corn crop had been planted, the slowest pace on record.
In contrast to the United States, rainfall in Europe has benefited crops by alleviating dryness. Grain industry association Coceral on Tuesday raised its forecast for European Union soft wheat production in 2019 due to improved crop weather. In Germany, cash premiums in Hamburg slipped as heavy rain in dry regions this week improved crop prospects.
"Rain fell in large volumes and has radically improved the wheat crop picture," one German trader said. "The worry about dryness, especially in east Germany and the north has basically been removed for the time being apart from a few areas mainly around the Polish border," the trader said. "I think there is growing expectation that the stage has been set for good crop development in the coming weeks." Standard bread wheat with 12 percent protein for September onwards delivery in Hamburg was offered for sale at 1 euro under Paris December against 0.50 euro under on Tuesday. Buyers were seeking at least 2 euros under.
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