Paris wheat futures extended losses on Friday to hit a new two-month low after the previous day's surge in the euro continued to weigh on a European wheat market dependent on exports to clear a hefty harvest surplus. The euro fell against the dollar on Friday but gave up only a small part of its biggest rise in nearly seven years on Thursday, when investors were disappointed by latest policy easing measures from the European Central Bank.
March milling wheat, the benchmark contract on Euronext, was 1.25 euros or 0.7 percent lower at 178.75 euros a tonne by 1710 GMT. It earlier fell to 178.25 euros, its lowest in more than two months. "For now the only thing we're trading on is the euro-dollar rate," one futures dealer said. "The exchange rate is the thing that could make a big difference and help us shift our supply."
The European Union on Thursday reported weekly export licences for 1 million tonnes of soft wheat, the highest volume granted so far during the 2015/16 season, in a further sign that a recent slide in the euro had stimulated demand. But traders say a sustained run of sales is needed to whittle down high stocks in France and elsewhere in Western Europe after bumper harvests this year. Strength in US wheat prices helped limit losses in Paris futures, as it did on Thursday.
Volumes on Euronext were light, with a major grain trade gathering in northern France keeping many participants away from their desks. Crop data in France underlined bearish supply fundamentals by suggesting the EU's top wheat grower is on course for another big harvest next year. First area estimates for 2016 issued by the farm ministry on Friday showed the winter wheat area up 1.5 percent at 5.22 million hectares, keeping the area at an 80-year high.
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