EU wheat hits new lows

Euronext wheat futures fell in late trading on Friday to new contract lows as widely followed US government crop forecasts signalled the prospect of ample global supplies of grain continuing next season. Benchmark September milling wheat on Paris-based Euronext settled 1.25 euros, or 0.7%, lower at 169.00 euros ($189.85) a tonne, just off a life-of-contract low of 168.75 euros touched after the US Department of Agriculture's (USDA) supply and demand forecasts. Front-month May, the last remaining 2018 harvest position on Euronext, ended its final trading session at 183.00 euros a tonne, down 1.2% on the day.
The USDA data included higher than expected projections of US corn and soybean stocks in 2019/20, as well as bigger than anticipated global wheat inventories. Chicago wheat fell along with corn and soybeans, although traders said market attention was also on fractious US-Chinese trade negotiations that have pressured grain markets this week. "When the USDA's 2019/20 US corn numbers came out above expectations, that triggered selling in Chicago corn and wheat and Matif (Euronext) tracked the movement," a futures dealer said.
"But there isn't much reaction in soybean prices because the USDA report is secondary to the issue of a trade deal," he added. "If there is a deal, there could be a wave of buying across markets and wheat could follow suit." Investors were waiting to see if a latest round of US-Chinese trade talks on Friday would overcome tensions that triggered fresh tariffs from Washington earlier in the day.
European wheat prices have also been pressured by the return of rain to dry grain belts, adding to a broadly positive outlook for wheat harvests in the northern hemisphere. In France, farm office FranceAgriMer estimated in a weekly report on Friday that 79% of French soft wheat crops were in good or excellent condition by May 6, unchanged from a week earlier.
In Germany, rainfall was welcomed by traders after a recent dry spell had threatened a re-run of last year's drought conditions. "Rain in past days was good news and with more expected in coming days some of the worries about the new crop are receding," one German trader said. "The relatively low temperatures also mean more water could reach wheat roots instead of evaporating."