European wheat tumbled to contract lows on Thursday, in a selloff in the face of hefty global supplies, sluggish export demand and gloomy financial markets, traders said. March milling wheat, the benchmark on Paris-based Euronext, settled 1.2 percent lower at 166.25 euros a tonne after hitting a contract low of 165.50 euros in early trade. "There was some panic selling today," a trader said. "The outlook is gloomy and it seems many decided it was time to come out before prices fall lower."
Volumes hit contract highs at more than 30,000 lots (1.5 million tonnes) exchanged on the sole March contract. The fall on Euronext weighed on US wheat futures, which fell for a second day in a row. The market remained pressured by hefty supplies after the US Department of Agriculture put US wheat stocks as of December 1 at their highest in five years and France's farm office raised its forecast of the country's soft wheat stocks sharply amid tough export competition from rivals including Argentina and Britain.
Egypt's supply ministry moved to clarify rules on wheat imports on Thursday, saying it would allow shipments with traces of the grain fungus ergot to enter the country. Wheat traders, concerned by uncertainty over payment and inspection terms in Egypt, said they were waiting to hear the agriculture ministry's response to be sure the problem was resolved. German cash premiums in Hamburg were weak, with purchase interest slack and falling Paris prices creating a bearish mood.
Standard wheat with 12 percent protein content for February delivery was offered for sale at 2.5 euros under the Paris March contract against 2 euros under on Wednesday. Buyers were offering 3.5 euros under Paris. "Purchase interest is weak in both the domestic and export sectors," one German trader said. "The bearish mood in wheat futures is also reaching the cash market. It is a buyers' market with little purchase interest visible as falling prices encourage buying delays."
"The export outlook does not look encouraging with the Baltic States and Argentina presenting competition to Germany in export markets. The new low level reached in ocean shipping costs favours origins like Argentina, which have to transport over long distances."
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