European wheat futures slipped to their lowest in nearly three months on Monday, as a higher euro and the prospect of export competition from Argentina reinforced bearish sentiment about large stocks. Prices later steadied, however, with help from a bounce in US futures, chart support around 176 euros, and a cautious mood ahead of this week's US Federal Reserve interest rate decision.
March milling wheat was unchanged at 176.00 euros a tonne by 1636 GMT, recovering from an earlier fall to 175.25 euros, its lowest since September 21. Argentina's President Mauricio Macri said he would sign off on Monday the abolition of export taxes on wheat and corn, as well as a reduction in the country's soybean export duty, in line with his election promises.
Traders have said Argentine wheat could become competitive in North African markets usually dominated by European Union wheat, helped by the export tax removal and planned easing of currency controls, and it was cited as a possible origin to fill part of a tender purchase by Algeria last week. "There is widespread gloom in the market with a backdrop of bearish fundamentals as underlined by the USDA's monthly report (last week) that raised world and EU and stocks," consultancy Agritel said in a report.
"Competition is stiff to sell to our usual (French) clients like Morocco and Algeria," it said. Favourable conditions for sowing and early development of winter wheat in Europe have also weighed on the market, although the EU's crop monitoring service warned on Monday that very mild weather could leave plants vulnerable to a cold snap.
In Germany, cash premiums were little changed, with confirmation Argentina will cut wheat export taxes adding to negative export sentiment. Standard wheat with 12 percent protein content for January delivery was offered for sale at 0.5 euros under the Paris March contract, unchanged on Friday. Buyers were offering 1.5 euros under. In Poland, wheat prices fell in the last week because of lower international markets plus sluggish export and internal demand, traders said.
Exporters were offering to buy Polish 12.5 percent protein wheat at 720 zloty (165.1 euros) a tonne delivered to port silos in December and 725 zloty for January delivery, down 10 zloty on the week. "Some 200,000 of milling wheat was shipped from Polish ports to non-EU countries in November and another 250,000 are in the pipeline or already loaded in December," a Polish trader said.
"One 63,000 vessel left Gdynia last week heading for Port Said in Egypt ... But the majority of this wheat is being delivered to port silos from old purchases done by exporters some months ago, or from old stocks collected ex-harvest," the trader said.
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