European wheat futures rose on Monday, recovering from an eight-month low, as a rally in corn and bullish export prospects encouraged the wheat market to look beyond bearish supply estimates from the US government. Benchmark May milling wheat on the Paris futures market was up 2.25 euros or 0.98 percent at 232.50 euros a tonne by 1238 GMT, to pull away from a low of 230.00 euros struck just before Friday's close.
Paris prices recovered in step with Chicago wheat as US corn futures rose for a third day after the USDA surprised the trade by not increasing US corn stocks. Movements were limited in quiet trading and with the market still facing technical pressure after last week's losses. "MATIF (Paris) milling wheat should be supported by stronger US grain markets," Arnaud Saulais of Starsupply Commodity Brokers in Geneva said.
"However on a longer term, the May 13 contract settled the week under the 232 euros/T support level (technical support) and is remaining in a bearish trend." Monday's session could also be marked by movements linked to the last day of trading for the front-month March futures. Friday's closely watched US Department of Agriculture report initially weighed on wheat markets by raising US and world wheat supply by more than expected.
But USDA's decision to leave US corn supply unchanged, plus an export-driven tightening of wheat supply in the European Union, provided support for European wheat. The USDA added 1 million tonnes to its forecast for EU all-wheat exports in 2012/13, leading it to cut its EU wheat stocks outlook to below 10 million tonnes. "This means we are currently facing the lowest European wheat stocks of the past few decades," French grains consultancy Agritel said in a note. "With stocks of scarcely more than three weeks' consumption, the overlapping period with next season is looking very tight in Europe." Weekly EU wheat export licences again showed strong volumes last week at 607,000 tonnes.
GERMANY In Germany, standard milling wheat for March delivery in Hamburg was offered for sale down two euros from late Friday levels, at 245 euros a tonne with buyers at around 243 euros, with prices corrected to reflect late Friday weakness in Paris.
"People seem to be taking a relaxed view of the USDA report which overall did not challenge people to make major reassessments of the fundamental market outlook," one German trader said. Thick snow in north German grainbelts was seen as providing wheat plants with good protection against a sudden fall in temperatures over the weekend. Continued demand and tight supplies kept feed wheat prices close or above milling wheat in parts of Germany. Feed wheat for nearby delivery in the South Oldenburg market near the Netherlands was offered for sale up 1 euro at 254 euros a tonne with buyers at 250 euros.
POLAND Polish wheat prices fell in the last week, with slack demand from mills and slow exports weakening. Milling wheat prices dropped by 20 zlotys (5 euros) a tonne to below the important 1,000 level, to 960 to 990 zlotys a tonne (231 to 239 euros) delivered to mills in Poland. Export wheat prices also fell by 20 zlotys but remained over internal prices at between 1,010 to 1,020 zlotys a tonne (244 to 246 euros) delivered to Baltic port silos.
"Grain prices in the country are continuing their recent decline," one Polish trader said. "The upcoming spring farm fieldwork and necessity to purchase fertilisers has encouraged more farmers to release some grains to the market, this selling is meeting moderate purchases by processors and slowing grain exports." Feed wheat prices also dropped by 20 zlotys to between 940 and 970 zlotys a tonne (227 to 234 euros) delivered to feed mill.
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