European wheat futures slipped to a new four-year low on Friday after a higher-than-expected global supply outlook from the US government and a tender by Algeria confirmed weak export prospects for a rain-affected French crop. November wheat on the Paris-based Euronext market unofficially closed down 1.25 euros or 0.8 percent at 162.75 euros a tonne. It earlier fell to 160.50 euros - to set a contract low and its weakest spot price since July 2010 for the second day in a row.
Wheat futures in Chicago also sank to a four-year low as the market digested Thursday's US Department of Agriculture report that sent grain markets skidding with a bigger-than-anticipated increase in its forecast for 2014/15 global wheat ending stocks, plus higher-than-expected production estimates for US corn and soybeans. "People are continuing to sell the Matif (Euronext)," one futures dealer said. "France is going to have to export at low prices as half of the crop is not milling grade."
Algeria's state grains agency OAIC bought around 400,000 tonnes of milling wheat in a tender this week, a deal in which usual supplier France is expected to miss out due to harvest quality problems, European traders said on Friday. France's farm office forecast on Wednesday that French wheat exports outside the European Union could fall by a third this season, partly as a lower-quality crop will make it hard for France to meet the requirements of some government buyers like OAIC.
Export sentiment in France was also dented by news on Thursday that Senalia, the biggest silo at France's top grain port of Rouen, had stopped taking in wheat. The company cited a high fill-rate at its facilities and slow export activity. However, Socomac, which operates another silo at Rouen and like Senalia is both an export conduit and a delivery point for wheat traded on Euronext, said on Friday it was continuing to take in wheat.
GERMANY German cash wheat premiums in Hamburg were slightly firmer, marked up to adjust to the fall in Paris and on export optimism. Standard wheat with 12 percent protein content for delivery in Hamburg from September was offered for sale at a premium of 9.5 euros over the Paris November contract against 9 euros over on Thursday. Buyers were offering 8.5 euros over Paris against 8 euros.
"I think there is a reluctance to follow Paris prices down fully as the export outlook is positive in Germany," one German trader said. "There is optimism that some of the wheat Algeria bought this week will be sourced in Germany." "Saudi Arabia is also tendering for wheat and I think there is a good chance Germany could get some of the business as Germany is a major supplier to the country."
Weekly EU export data suggested strong overall demand for the bloc as a whole, with 661,000 tonnes of soft wheat export licences cleared this week. This put the total so far this season slightly ahead of the volume at this point last season, which was a record year for EU wheat exports.
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