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European wheat futures eased on Monday to trade close to a three-month low as a fall in Chicago and a stronger euro maintained a bearish mood in a well-supplied wheat market. Volumes were thin as cash markets in Europe were at a virtual standstill ahead of the Christmas and New Year holidays. March wheat futures in Paris settled down 1.50 euros, or 0.9 percent, at 174.75 euros a tonne, near Thursday's three-month low of 174.00 euros.
Chicago wheat fell more than 1 percent to give up some of its gains from last week that had been fuelled by short-covering. Ample supplies and stiff export competition continued to hang over the market. But with Euronext futures repeatedly holding chart support around 174 euros, and global crop risks emerging for next year, some analysts see scope for a rebound. "The heavy supply situation of the 2015/16 season seems in our view to be well priced in by the market, which will have to start looking towards the 2016 harvest," consultancy Agritel said in a note. "The abnormally high temperatures being registered across the northern hemisphere are raising a number of questions."
Crop analysts warn that current mild conditions could leave crops vulnerable to a winter cold snap. This could add to early development problems in Ukraine, where Agritel forecast wheat production could drop by one-third next year to 17.2 million tonnes after drought cut sharply the crop area.
In Russia, prices eased again last week and the agriculture ministry called for an export tax to be cut or scrapped, according to Interfax. Traders also expect increased competition from Argentina following the devaluation of the country's currency and the scrapping of a wheat export tax.

Copyright Reuters, 2015

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