European Union wheat prices rise

European Union wheat prices rose on Wednesday, rebounding from 2-1/2 year lows hit on Monday, following a large purchase by Algeria of 810,000 tonnes of EU wheat while strong US markets also underpinned prices. Support also came from concerns about quality damage to EU wheat crops from the recent wet spell, notably in the bloc's top wheat producer France.
Paris November milling wheat was up 1.50 euros or 0.8 percent at 178.50 euros a tonne at 1610 GMT, but still not far from a 2-1/2 year low of 177 euros hit on Tuesday. Algeria's state grains agency OAIC bought 810,000 tonnes of French/EU milling wheat at between $268 and $269.50 a tonne c&f in a tender on Tuesday, European traders said on Wednesday.
"Algeria is supportive but people are waiting to have more information about the quality of the wheat (crop)," one European trader said. "There is a lot of talk of damage but we don't know to what extent." Rain has fallen in much of west Europe as wheat is at its most vulnerable state just before harvesting. "There is talk of germination. Is it farmers crying wolf or is it widespread? That's the question," said Agritel analyst Sebastien Poncelet.
Support also came from rising US wheat prices which saw bargain-hunting after hitting their lowest in four years on Friday following a US Department of Agriculture report forecasting plentiful supplies of grains and oilseeds. The European Union will apply import tariffs of 5.32 euros per tonne on maize, sorghum and rye imports from Wednesday after a slump on international markets pushed prices below a duty triggering level, the EU official journal said.
The move would make imported maize more expensive and could increase feed wheat demand. German cash wheat premiums were slightly weaker as dryer weather is forecast for Germany after weeks of repeated rain. Firmer Paris prices also reduced the need to mark up premiums to compensate for recent falls in Paris futures. Standard new crop wheat with 12 percent protein content for delivery in Hamburg from September was offered for sale at 6 euros over the Paris November contract against 6.5 euros over on Tuesday. Buyers were offering an unchanged 5.5 euros over Paris.
"Premiums were marked up this week to compensate for falling futures and there is less need for this action today," one German trader said. "Weather forecasts are also improving for Germany following over two weeks of repeated rain with sunshine again forecast from Thursday although with showers again returning on Sunday." "Wheat needs more sunshine to ripen and reach good quality, so the weather change is welcome. Farmer selling remains low as farmers are unhappy about the current low price levels."
Germany's barley harvest has been delayed by rain but traders hope work will resume as sunshine returns. Germany's wheat harvesting is starting in isolated areas but is not likely to begin on a wide scale until early August, traders said. "There is concern about wheat stalks being knocked over by the heavy rain some areas have seen in the last fortnight and about possible quality loss, but I think problems are regional and overall the national picture for the German wheat harvest remains positive," another trader said.