EU wheat futures turn lower after three-week high

Euronext wheat futures turned lower on Tuesday, after earlier hitting a three-week high, as sellers took advantage of the run-up in prices and a rally in the US market petered out. Prices remained underpinned by brisk exports, with an import tender by Algeria promising fresh sales for European Union origins, but there was little fundamental news to justify further price gains, traders said.
May wheat futures on Euronext, now the benchmark contract for the market, settled 0.50 euro or 0.3 percent lower at 189.50 euros a tonne, after earlier climbing to its highest in almost three weeks at 192.25 euros. Front-month March wheat settled down 0.75 euro at 188.00 euros, after also hitting a near three-week high earlier in the session at 190.75 euros.
Chicago wheat, which resumed trading after a three-day holiday weekend in the United States, rose to its highest in almost a month before giving up gains to trade little changed. "The loss of momentum in Chicago is weighing on the European wheat market. The rally to the 190 euro-mark was a bit unexpected and there was strong selling around this level," one Euronext dealer said.
The European market was also settling down after volatility generated by the expiry on Monday of options on March futures, dealers said. Trading in new-crop futures remained light due to uncertainty over how the launch next month of a higher-quality wheat contract by Euronext, plus the expected launch of rival futures by CME Group, will affect pricing. A tender by Algeria, in which the bidding deadline is on Wednesday, is expected to bring new sales for EU wheat that is currently on a record export pace this season.
However, European traders noted that Algeria was now buying for June, the last month of the wheat marketing year and new demand from other buyers was limited. "Exports mainly seem to involve execution of old contracts rather than new business, but shipments are going at full speed," a Polish trader said.
Export prices for Polish wheat with 12.5 percent content were little changed on the week at 810 to 815 zlotys a tonne (193.4 to 194.6 euros) for February/March delivery to ports. Wheat with 11.5 percent protein fell 45 zlotys a tonne to 760 to 770 zlotys a tonne for February/March delivery. In Germany, standard wheat with 12 percent protein content for delivery in Hamburg in March was offered for sale at an unchanged premium of 6 euros over the Paris March contract. Buyers were offering 5 euros over.