European Union wheat futures dropped on Wednesday as the US Department of Agriculture (USDA) raised its estimate of the US wheat harvest above analysts' expectations. December wheat, the new crop benchmark on the Paris-based Euronext market, unofficially closed down 2.50 euros or 1.3 percent at 185.25 euros a tonne.
The USDA forecast the US winter wheat crop at 1.505 billion bushels in its new world supply and demand report, up 33 million bushels from its forecast in May. Analysts had on average expected 1.474 billion bushels, a Reuters poll showed. US wheat futures also fell sharply after the report.
"The report gave us higher US wheat production and enormous US wheat and corn stocks," one Euronext dealer said. "All that should lead to a big price correction, although funds are short in wheat and may still buy back positions." "Euronext is following the Chicago trend. We also ran up against the resistance level at 188.50 euros again this week on the December contract."
The USDA put 2015/16 season-end inventories of wheat at 814 million bushels, up from 793 million estimated in May. German cash wheat premiums in Hamburg were flat to firm as the impact of dry weather in parts of Germany was assessed. Standard wheat with 12 percent protein content for June delivery in Hamburg was offered for sale at an unchanged 1 euro over the Paris December contract. Buyers were offering level Paris.
New crop for September delivery was firmer as dryness continued in some regions, with sellers at 5 euros over Paris December against 4 euros over on Tuesday. Buyers were at 4 euros over. In Poland, prices also firmed in the last week, supported by recent strength in Paris futures and concern about dryness in Poland.
Polish 12.5 percent protein wheat for June delivery to port silos was up 20 zloty on the week at around 725 zloty a tonne (175 euros). Wheat with 11.5 percent protein rose 10 zlotys to around 695 zlotys a tonne. "Everybody is watching the weather as parts of Poland are dry," one Polish trader said. "Recent heavy rain in the south of the country helped grains but in north west and central Poland some regions have not received significant rain for 40 days. "Farmers are complaining but if these regions get rain soon, the influence on the yields will be only minimal. Some rain is forecast for the weekend."
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