Western European wheat markets fell in late trade on Thursday in the wake of a drop on US grains markets, but remained off one-year lows scored in early trade in a bearish reaction to closely watched US government forecasts. On the Paris futures market, benchmark November milling wheat slipped to its lowest in over a year at 195.50 euros in morning trade, before recovering to trade at a high of 199.25 euros. By 1550 GMT they were down again at 197.00 euros, off 0.50 euro on day.
"Technically the market is looking bearish since we broke the 200 euro floor. But at the same time we have fallen a long way and we need a breather," one futures dealer said. The benchmark Paris contract has lost about 13 euros since the highs reached on June 3.
US grain futures shed 1 percent or more on Thursday, with corn falling to a three-week low as growing conditions turned ideal in the Midwest grain belt, dampening bullish sentiment for tight old-crop supplies. Many operators expect the US Agriculture Department will have to cut further its corn crop outlook after making only a modest reduction on Wednesday. Dealers also said that the USDA report was not bearish for wheat on a world level, with a sharp cut to the outlook for global wheat stocks next season.
European prices have also been pressured by a rise in the euro to a near four-month high on Thursday at $1.3390, although it then eased. World cereal production is expected to rise 6.5 percent in 2013/14 to reach a record 2.46 billion tonnes, mainly due to higher wheat output and a rebound in maize production in the United States, the UN's food agency FAO said. Standard new crop milling wheat for September delivery in Hamburg was offered for sale stable at 203 euros a tonne with buyers at around 202 euros.
But buyers in other parts of Germany were often seeking 3 to 4 euros under selling prices, traders said. "In some parts of Germany buyers and sellers are wide apart in price ideas. Buyers want the bearish impact of the USDA report reflected in prices but sellers are resisting," one trader said.
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