European wheat futures rose to a three-week high on Friday before falling back to little changed when a rally in Chicago ran out of steam. Dealers said prices in Chicago had initially been supported by short covering fuelled partly by forecasts of storms over US hard red winter crop areas, which heightened crop concerns. There was a mixed reaction to news that the duty of Russian exports was being lifted.
Russian exporters will pay no fees for selling wheat abroad from Friday until the introduction of a new export duty, calculated under a different formula, from July 1, a spokeswoman for the agriculture ministry told Reuters. "Traders now estimate that Russia would export 1.2 million tonnes during the next six weeks, bringing renewed pressure on market prices," UK merchant Frontier Agriculture said in a market update on Friday.
In Europe, analysts at Strategie Grains on Thursday slashed their forecast for European Union soft wheat exports next season by 2.6 million tonnes, mainly due to increased competition faced by France from the Black Sea region. Another trader, however, said the potential for a new duty could be seen as supportive. "The market had in past weeks been expecting a complete end to export taxes on July 1, now a new formula is being discussed which does not seem like a zero duty," one European trader said. "Advanced sales of Russian wheat are still highly risky in this continued uncertainty," the trader added.
December milling wheat, the new-crop benchmark and most active contract on the Paris Euronext exchange, was up 0.25 euro or 0.25 percent at 178.00 euros a tonne by 1605 GMT. It earlier climbed to 180.00 euros, a level last reached on April 27, to add to a 2.5 percent rise on Thursday.
In France, farm office FranceAgriMer said on Friday that crop conditions remained mostly favourable for this year's harvest. It rated 91 percent of soft wheat good or excellent as of May 11. German cash wheat premiums in Hamburg followed the international firmness but in thin market participation as many traders took the day off following a public holiday on Thursday. Standard wheat with 12 percent protein content for May delivery in Hamburg was offered for sale at a premium of 6 euros over the Paris December contract against 5.5 euros over on Wednesday. Buyers were offering 5 euros over.
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