EU wheat futures fall on euro strength

European wheat futures fell to their lowest in about a month on Wednesday, hurt by an export-punishing rise in the euro in volatile markets ahead of Britain's vote on whether to stay in the European Union. September milling wheat on the Paris-based Euronext exchange unofficially closed down 1 euro or 0.6 percent at 161.50 euros a tonne. It earlier dropped to 161.00 euros, the lowest since May 23.
"The market continues to move in line with the two main drivers," a Euronext trader said. "Yesterday, the weather took the lead ... while today currencies are setting the tone." The euro rose against the dollar on Thursday as investors grew more optimistic that Britain would vote to stay in the EU.
At current prices French wheat was not likely to be selected in Algeria's tender on Wednesday to purchase around 450,000 to 500,000 tonnes of optional-origin milling wheat for September shipment, traders said. Wheat brokers noted a persistent lack of sellers in France's cash market, despite rising premiums, due to concerns on the final quality of the French harvest after recent heavy rain. "There will be feed wheat but we don't know the share (of the total crop) yet," one French dealer said.
This uncertainty was making it difficult to assess prices in the cash market, he said. Sellers also said it was too risky to make advanced sales of milling wheat in view of uncertainty about what quality they will actually receive from this year's French harvest. German cash market premiums in Hamburg remained firm on continued demand following concern that repeated rain in Germany and elsewhere in west Europe could reduce protein levels of new crop wheat.
Standard wheat with 12 percent protein content for September delivery was offered for sale at an unchanged 1.5 euros over the Paris December contract. Buyers were seeking level Paris. "The premiums remained at this week's firm levels," one German trader said. "There is worry that the recent rain will damage the quality of wheat in parts of west Europe, especially protein content." "There is purchase interest in German high protein wheat from several countries including France." Hamburg premiums for higher protein grades remained well above standard wheat, with the 13 percent protein content A grade offered for sale at 7.5 euros over Paris for September delivery.