European wheat edged lower on Friday to post a weekly loss of more than 3%, following a fall in Chicago and under pressure from a rise of the euro against the dollar hampering European exporters' competitiveness on world markets.
Benchmark September milling wheat on Paris-based Euronext, was 0.1 percent lower by 1600 GMT to 179.25 euros ($203) a tonne. The contract shed 3.4 percent in the past week, erasing all gains recorded in the previous week. "The outlook of plentiful harvests, in France but also in Germany, continues to put a break on price increases. The move is reinforced by a rise of the euro against the dollar and by a still poor competitiveness compared to Black Sea origins for the first month of next season," a trader said.
Traders were also awaiting the return to market of major international buyers, such as Egypt and Algeria, to have a better idea of world market prices. The euro was headed for its strongest week since September on Friday, largely due to weakness in the dollar which could fall later in the day if US jobs data disappoints.
Monday is a public holiday in many parts of the European Union, including France and Germany, but Euronext grain futures markets will be open. In Germany, cash premiums in Hamburg were little changed as dealers assessed German crop conditions after welcome rain.
Standard bread wheat with 12% protein for September onwards delivery in Hamburg was offered for sale flat at 2 euros under Paris December. Buyers were seeking at least 4 euros under. Internal markets were sometimes similar to export levels. Wheat with 12% protein for September onwards delivery traded on Thursday at 2 euros under Paris for delivery in Berlin.
"After repeated rain in the past couple of weeks, the market is now expecting a larger harvest this summer but possibly with quality varying," one German trader said. "More rain is forecast in the coming week so harvest volumes should be good. But there could be quality problems in some areas, especially with low wheat protein levels."
The combination of large crop yields and new restrictions on fertiliser use to protect the environment could reduce wheat protein content, a key quality criteria, in some regions. "This could mean reduced volumes of wheat with 12.5% and 13% protein levels which are important for Germany's exports," the trader said. "The market will be watching closely to see what impact the fertiliser restrictions actually have on wheat protein and how much of the harvest is under 12% protein content."
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