European wheat prices ebbed on Friday as a stronger euro dented export prospects and the EU's latest sales of intervention stocks to the internal market weighed on sentiment, traders said.
French wheat came under pressure from the outset from the strong euro and the decision on Thursday by the EU's grain management committee to sell more intervention stocks internally. "The dollar effect is the main bearish element," one trader said, noting heavy spread trades on the futures market.
The EU panel agreed on Thursday to sell more than 270,000 tonnes of wheat, barley and maize from intervention stocks and decided to open up almost one million tonnes more for sale.
"The only market where we've still got uncovered demand is for feed barley," one trader said, stressing the relatively good quality of the wheat resold under the tenders that was easily able to suit the needs of industrial buyers.
Despite the good demand, feed barley prices also fell due to euro strength and quoted down one euro, delivered Rouen at 146 euros a tonne for nearby positions.
Maize futures were also weaker, although cash prices found support from continued logistical problems due to low Danube river levels and Croatia's decision to impose an export tax.
In the UK, feed wheat futures were lower, weakened partly by the strength of sterling against the dollar, dealers said. "The dollar gave it the knock it needed (to go lower)," one dealer said.
Dealers said business in the physical market remained slow. "There is little or no farmer selling," one said. Another substantial sale by the EU of German intervention wheat kept German business quiet on Friday. The EU sold 63,324 tonnes of intervention wheat at a minimum price of 147.00 euros, down only one cent on last week.
"A sale of this volume means mills will almost certainly be out of the domestic market in the next week," one trader said. "It was a little surprising that Brussels did not cut the price but I regard it as a fair price which will not disrupt the commercial market." Standard bread wheat for November delivery in Hamburg was offered for sale unchanged at around 155 euros a tonne.
"The large volume of the intervention sales coupled with the approaching Christmas slowdown could weaken commercial prices in the next couple of weeks," one trader said. "This could in turn mean lower prices in the intervention sales."
The EU also sold Hungarian wheat at the much lower price of 114.50 euros. "But high transport costs mean this cannot be brought to Germany and sold for under 147 euros," a trader said.
Benelux feed wheat was stable to slightly lower in slow business as prices lacked direction after US markets were closed for a holiday, traders said. Some reported strong demand in Belgium in the last few days for January-March wheat and November-December barley as feed covered needs. December feed wheat was offered at 160 euros a tonne CIF Dutch ports and January-June 2007 at 164, flat from earlier this week. In Belgium, December wheat was quoted at 155 euros a tonne delivered by truck and January-June 2007 at 158 euros, down one euro from earlier this week.