German wheat prices drop sharply

German wheat prices dropped suddenly in the past few days as both flour mills and animal feed makers reduced purchasing, traders said on Tuesday.
At 1150 GMT, the May 2004 milling wheat contract on German futures exchange WTB was at 154.50 euros a tonne, down 1.50 euros on its high point early last week.
In the important internal market in South Oldenburg, May/June delivery bread wheat was offered for sale at 160 euros a tonne, down some 3.5 euros on the week.
"The great problem is that consumers are not in the market and so prices are falling because of lack of purchase interest," one trader said.
Many mills are thought to have good supply cover until the end of April, while animal feed makers are receiving large volumes of rye each week from the European Union's series of sales from its intervention stocks for use inside the EU.
Last week the EU sold 17,047 tonnes of German rye from intervention stocks but only 1,750 tonnes of wheat.
Traders noted the EU accepted almost all the German bids last week for 18,797 tonnes of rye.
"This sort of award is keeping feed makers out of the market while mills are still hoping Brussels will make more substantial wheat awards soon which would weaken overall prices," one said. "So by waiting mills could buy cheaper."
"Grain volumes generally on sale in the market are larger than had been anticipated for this time of the season. Mills are being offered good supplies and this contradicts everything about the tight supply balance spoken about so much in past months."
Germany's grain exports have also fallen substantially following suspension of EU export subsidies last year, contributing to higher domestic supplies at this late stage of the season.
German weather remains generally mild for the time of year and rainfall has been good.
No significant crop damage has been reported and grain plantings are making good progress.
This is bringing increasing confidence of a good crop this summer following two German harvests in a row heavily damaged by bad weather.