European wheat futures edged lower on Tuesday, following weaker US grains markets and pressured by forecasts of rain showers in drought-hit Argentina this week although the impact of these was still difficult to assess, traders said. By 1312 GMT, the benchmark contract March was 1.00 euros or 0.5 percent lower at 200.25 euros a tonne.
It remained within its bullish channel but without breaking its resistance at 202-203 euros a tonne, traders said. Charts indicated support at around 198 euros a tonne. Front-month January expires on Tuesday. In Chicago, US wheat futures were slightly lower with front month March down 2-1/2 cents or 0.39 percent at $6.39-1/4 a bushell. "The market is hesitant. It needs to follow something so follows the leading market in Chicago," one Euronext trader said.
Traders said the European market had priced in fears about drought in South America more than its US counterpart and needed to take a breather. Rain showers are expected in Argentina's main farm areas this week, but climatologists question whether the amount of water to hit the drought-stricken pampas will be enough to revive key corn and soy crops.
Analysts expect Thursday's US Department of Agriculture report on global supply and demand of farm products to slash forecasts for South American corn and soybean crops and cut estimates of US grain ending stocks for the 2011/12 season.
Traders would also watch the USDA's crop forecasts for Ukraine, a major competitor of European wheat on the world market, where poor weather has lead to a cut in crop and export estimates. Global stocks and the euro rose thanks to signs of resilience in the euro zone economy and rising hopes for US corporate results but concerns about Europe's debt problems capped gains.
The rapeseed market was nearly stable despite a fall in US soybean futures, helped by a rise in crude oil prices and low availabilities in Europe. Front-month February was unchanged at 457.75 euros a tonne, still with a high premium over March, which traded at 439.50 euros, down 0.1 percent. Germany's market was little changed with a cautious tone ahead of the US Department of Agriculture crop reports on Thursday but with feed wheat prices supported by strong demand. Standard bread-quality wheat for January delivery was offered for sale flat on late Monday levels at around 203 euros a tonne, with buyers at around 202 euros.
New crop 2012 selling prices were maintaining a premium of about 5 euros over Paris levels with buyers offering 3 euros over Paris new crop contracts. "The market is currently somewhat cautious with the latest weather news from Argentina awaited, with forecasts of weather in drought areas," one trader said. "I do not think many people are ready to take risks before the USDA reports on Thursday."
Short covering by animal feed makers was keeping some German feed wheat prices at around milling wheat levels. Feed wheat for delivery in the South Oldenburg market near the Netherlands was offered for sale at 203 euros a tonne for nearby deliveries with buyers around 200 euros.
Wheat prices in Italy, a major grain buyer in Europe, were little changed ahead of a key weekly session of Milan's cereals exchange later on Tuesday, with some traders expecting to see prices rising higher after 3-6 euro gains last week fuelled by more expensive imports. Bread quality wheat was traded at 220-225 euros a tonne for prompt delivery, in line or slightly higher than levels set by Milan's grain bourse prices of last week, traders said.
Comments
Comments are closed.