European wheat futures slipped to a four-year low on Tuesday as advancing harvests in the northern hemisphere underlined rising global supply and tough export competition. On the Paris-based Euronext futures market, November milling wheat fell as much as 3.25 euros to 175.00 euros a tonne, a contract low and the lowest spot price since July 2010.
By 1554 GMT the November contract was down 3.00 euros or 1.68 percent at 175.25 euros. Uncertainty about the outcome of a rain-affected harvest in western Europe had encouraged Paris prices to consolidate last week after a previous four-year low.
But harvest progress this week in major exporters the United States, Russia and Ukraine, plus signs of good crop prospects in western Australia reinforced bearish sentiment.
"There is plenty of wheat around in the world," Commerzbank analyst Michaela Kuhl said. "The outlook is pretty positive for the (Black Sea) grain harvest."
Consultancy UkrAgroConsult on Tuesday raised its forecast for Ukraine's 2014 grain harvest by around 4 percent to 57.4 million tonnes, including an increase in its wheat crop outlook to 21 million tonnes from 20.5 million previously.
This came a day after Russian consultancy IKAR put Russia's wheat crop at 57.5 million tonnes, adding more than a million tonnes to its previous outlook.
In Australia, where there has been concern about a possible El Nino weather pattern, the top grain producing state Western Australia is likely to beat official forecasts for wheat output in the 2014/15 by about 1 million tonnes, exporter CBH Group said on Tuesday.
In Europe, showers and overcast weather continued to hamper progress in the French wheat harvest and maintain concerns over quality losses.
Traders said a clear picture of quality may not emerge for at least another week due to the slow advance of the harvest in grain belts north of Paris, but that exports to milling market already looked tough.
"The general view in the market is that we've had enough quality damage already that we'll have to find some feed wheat destinations for a sizeable volume of the crop," one French trader said.
"The question beyond that is whether this is going to be the case for a few weeks or a more structural trend over the whole season."
Morocco, one of the main export destinations for French wheat, has decided to its customs duty on soft wheat on September 1, the government said, signalling an earlier start to its annual import campaign that favours Black Sea exporters.
German cash wheat premiums remained stronger as concern continued that crop quality will be damaged by persistent rain in Germany just as the main harvest approaches.
Standard new crop wheat with 12 percent protein content for delivery in Hamburg from September was offered for sale at a premium of 8.5 euros over the Paris November contract, up 0.5 euro. Buyers were offering 7.5 euros over Paris, up 0.5 euros.
"I think it is starting to become clear that the rain will reduce the protein content of much of the German wheat harvest this year," one German trader said. "The overall picture is still not precise but there was heavy rain in parts of the country on Monday night and again Tuesday while the outlook for the rest of the week is also rather wet."
"This is not good for crop quality."
"Wheat in the north German grain regions has not had much rain and still looks good. But there is growing concern about crops in the centre and the south of the country."
There is also a worry about possible problems with Hagberg numbers, he added. Hagberg values are an important measurement of milling qualities.
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