EU wheat prices fall

European wheat fell on Friday after the EU stepped up sales from intervention stores onto the domestic market, sending buyers into retreat, traders said. French wheat continued its downtrend as Chicago's weakness was reinforced by the EU's sizeable resale awards.
The EU grain panel sold more than 400,000 tonnes of intervention grain onto the domestic market, including 243,344 tonnes of wheat at prices several euros lower than a week ago.
Traders also said the good level of cover by industry buyers and the loss of competitiveness on world markets due to the fall in US prices and the euro's rise also weighed on sentiment. But sellers were also on the sidelines, they added.
"They are not ready to sell on the cheap. They have already sold quite a lot and are happy to wait," one trader said.
Paris-traded January futures were off 1.25 euros at 153.50 by 1500 GMT, down 3.25 euros since last Friday's close. Feed barley was steadier, bid on the cash market at 149 euros for end-of-year Rouen delivery and at 148 euros for Jan, against 151 euros reached earlier this week.
The panel's move to curb the validity of free-market export licences for barley came as no surprise to traders, but they said the decision would prevent them taking long-term positions. London feed wheat contracts were similarly lower, posting losses of between 0.90 and 1.30 stg a tonne.
Germany's market was little changed with the EU's sale on Thursday of a substantial 44,154 tonnes of German intervention wheat for use in the domestic market fulfilling buyers' needs.
Standard bread wheat for November delivery in Hamburg was offered for sale unchanged at around 155 euros a tonne. The EU sold the German wheat at a minimum price of 147.01 euros a tonne, down from 151.50 euros last week.
"I think this is a sale at a fair commercial price which will not disrupt the market," one trader said. "The remaining lots on offer are at more isolated locations with higher transport costs, so a slightly lower price is justified."
"The mills would probably have received this level last week if some of them had not submitted such high bids."
German traders were puzzled at the EU's low prices for its sales of domestic use intervention wheat in other countries. "Hungary was sold at a remarkably low minimum price of 109 euros while Swedish wheat was sold at around 10 euros cheaper than German," one trader said. "Unless these consignments have very high transport costs it is difficult to see any reason for this huge price difference."
Benelux feed wheat prices eased, reflecting a drop in CBOT futures in slow trade as market players awaited fresh news. "We saw quite a bit of activity in the past two weeks, feed makers were covering barley and wheat needs for January/March. But now it's getting slow again with Chicago falling they prefer to wait," one trader said.
December feed wheat were offered at 160 euros CIF Dutch ports, 1.50 euro lower from earlier this week, while January-June'07 lost one euro to 164. In Belgium, November feed wheat was offered at 154 euros delivered by truck, down one, and January-June'07 was unchanged at 158.50 euros.