Paris wheat futures fell on Thursday, pressured by a sharp pullback in US prices after a weather-fuelled surge, while European traders continued to assess harvest prospects. December milling wheat, the most active contract on the Paris-based Euronext exchange, settled 2.75 euros, or 1.5 percent, lower at 184.25 euros a tonne. It earlier touched its lowest in almost a week at 183.50 euros, as it moved away from an 18-month high of 189.00 euros hit during the previous session.
But Euronext held up better than US futures which shed more than 3 percent in a retreat from two-year highs on Wednesday. "Matif (Euronext) is tracking the correction seen in Chicago and also facing some pressure from farmer selling as harvesting advances," a Euronext trader said. "The drop is not as steep on Matif, though, as it hadn't climbed as much as the US market, and we're holding chart support at 183 euros on December futures." Traders also said Euronext was supported to some extent by spreads, where investors were selling US futures and buying on the European market.
There was scope for renewed price gains on wheat markets given forecasts calling for hot, dry weather in northern United States, where damage to spring wheat sparked the recent run-up in international prices, traders said. In export news, European Union soft wheat exports in the 2016/17 season that closed on June 30 totalled 23.35 million tonnes, down 26 percent from the prior season, official data showed.
In Germany, cash premiums for high protein wheat in Hamburg were again strong on expectations Germany could win new export sales if weather damage cuts supplies of US spring wheat. High quality wheat with 14 percent protein content for September/December delivery in Hamburg was offered for sale at an unchanged premium of 22-23 euros over Paris December. This was again way above standard bread wheat with 12 percent protein content, offered for sale at an unchanged 4 euros under the Paris December contract for September delivery in Hamburg.
"High protein wheat maintains its huge price difference against standard milling wheat because of exporter purchase interest," one German trader said. "The big question now is whether Germany will actually harvest the high quality grades we are hoping for." After a rainy start to July, more sunshine is now forecast in the next week which could help wheat quality develop, the trader said. French traders were also monitoring the impact of rain, which could affect wheat quality ahead of harvesting in major grain belts in the northern half of the country.
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