European wheat prices continue to slide

European wheat prices continued to slide on Friday, touching a 7 month low and shedding 4.6 percent this week, pressured by hefty supplies, competition and a technical sell-off, traders said. Benchmark March milling wheat on Paris-based Euronext settled at 185.50 euros a tonne after falling as low as 185.00 euros, a price not seen since July 12.
The contract has lost 10 percent in the past month. "The sentiment is obviously extremely bearish, and perhaps rightly so, but the emergence of any weather problems means markets can go up as well as down, quickly and violently," said Kieran Walsh, head of agricultural and soft commodities at ICAP.
The fall was even steeper in Chicago this week. At 1743 GMT, the most active May contract was on its way to posting an 8.3 percent weekly loss.
"We were feeling that the market had to correct a bit but we did not expect such a sharp fall," a French cash broker said.
He pointed to a heavy flow of shipments out of French ports but noted that some of France's key clients such as Morocco and Algeria are already well covered.
In Germany, cash premiums in Hamburg for high protein wheat firmed in the hopes that part of a large international purchase tender for 595,000 tonnes of wheat from Saudi Arabia will be supplied from Germany.
Offers in the tender from Saudi state grains buyer SAGO are being submitted on Friday and results are expected on Monday. Saudi Arabia is a leading customer for German wheat.
March/May delivery wheat with 12.5 percent protein, the same grade sought as Saudi Arabia, was offered for sale at about 9 to 10 euros fob Hamburg over Paris May, up from around 8 euros over before the tender was issued on Thursday.
"There is optimism that if north Europe is used to supply the Saudi wheat that Germany will get part of the business," one German trader said. "Supplies of 12.5 percent wheat from Poland and Lithuania are currently tight."
"But the competition for the Saudi business will be especially hard this time with export demand generally slack and many countries seeking sales opportunities." "The fall in Paris this week could help EU wheat to gain some more export sales such as to Saudi Arabia."