European benchmark wheat fell for a second straight session on Thursday, under pressure from hedging by French farm co-operatives, although weakness in the euro boosted the region's exports more competitive and pared early losses. On the Euronext exchange in Paris the most actively traded March contract was 0.26 percent lower at 195.00 euros a tonne by 1245 GMT after briefly hitting key support at 193.50 euros in earlier trade.
The contract ended a 13-day rally, but technical factors did not point to a change of the trend. The RSI line came back below the bearish 70 percent threshold after holding it for nearly a week. Many French farmers returning to the physical market on Wednesday decided to take advantage of the rally and sell wheat to their farm co-operatives, which hedged their purchases on the futures market on Thursday morning, brokers said.
"Surprisingly, farmers want to cash in on the rise between Christmas and New Year, when we believed they could afford to wait," one cash broker said. The euro tumbled to a 15-month low against the dollar and an 11-year low versus the yen on Thursday. Traders noted French wheat prices to Morocco were now level with Argentine wheat, which has been buoyed by increasing worries over the drought-hit corn crop.
No purchase of French wheat has yet been reported. "In a falling market, buyers are in no hurry," one exporter said. Rapeseed futures were also lower, following US markets and lower crude oil prices, with February down 0.4 percent at 449.50 euros a tonne with the next support put at 145.25 euros.
Spanish physical wheat was higher in a delayed reaction to recent gains in Paris and Chicago, although trade was slow as dealers drifted back from holidays and awaited the outcome of an auction for permits to import cheap wheat. Bids will be tendered on Friday for a tranche of 1.6 million tonnes of low- and medium-quality wheat from countries other than Canada or the United States under the European Union's tariff-rate quota (TRQ) scheme.
Results are due on January 15. Dealers in import-dependent Spain typically use TRQ permits to buy feed wheat from Ukraine, although they also bought Russian wheat in the last tranche opened in September. "The market has been very quiet, what with the holidays, but quotes are now being made, and deals will be closed as soon as the auction results are known," a dealer said. Prompt feed wheat was quoted at 213-214 euros/tonne in main grains port Tarragona, up from 212 euros on Monday.
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