Western European wheat markets were flat to higher on Friday as strength in US prices offset pressure from improving crop weather in Europe. Movements were limited as operators awaited clearer indications on harvest prospects across the northern hemisphere.
On the Paris futures market, front-month May milling wheat was up 0.25 euros or 0.1 percent at 245.25 euros by 1611 GMT. New-crop November added 1.25 euros or 0.6 percent to 213.50 euros. Paris prices had fallen on Thursday under pressure from corn-driven losses in Chicago, but then tracked a rebound in corn on Friday as traders focused on forecasts rain that could further delay US corn planting.
US wheat crops were also facing more cold weather next week after frost this week that may have damaged some plants. "Traders are remaining cautious as another round of freezing temperatures in the US plains at midweek probably harmed more of the winter wheat crop," Arnaud Saulais of Starsupply Commodity Brokers in Geneva said. "As a consequence the next US crop rating report will be followed very closely," he said, referring to weekly US Department of Agriculture data due on Monday. The arrival of warm weather in western Europe in the past week, however, has eased concerns about crops there after a recent spell of cold weather. In France, figures from farm office FranceAgriMer suggested the growth of crops had accelerated last week but remained well behind last year's pace.
As of April 15, 69 percent of soft wheat crops had reached the 1-centimetre head stage, up from 37 percent the prior week but down from 99 percent a year earlier. For the subsequent two-nodes stage, the share had risen to 8 percent from 2 percent a week earlier and against 46 percent a year ago. For maize, 4 percent of the crop was estimated to have been planted against 1 percent the prior week and 49 percent a year earlier.
In exports, weekly European Union data showed 392,000 tonnes of soft wheat export licences were awarded this week, up from 341,000 tonnes last week and just above the average weekly pace so far this season. But this was overshadowed by the highest weekly US wheat export sales in six years, suggesting a shift in global demand towards cheaper US wheat was gathering pace.
French traders said other export news suggested shipments from France, the EU's top wheat exporter, were set to tail off. In a tender on Friday, Tunisia's state grains agency purchased 50,000 tonnes of soft wheat, paying $325 a tonne, cost and freight, for 25,000 tonnes for June 10-20 shipment, and $330 a tonne c&f for another 25,000 tonnes for June 1-10 shipment, traders said.
Some traders said the prices, which were well below best reported offers of French wheat at $352.75 for June shipment, suggested sellers would choose a Black Sea origin. A leading Russian analyst said this week the country could return to wheat export markets in the coming weeks after prices fell back in recent weeks. Russian export volumes dried up at the start of 2013 after a drought-depleted 2012 harvest.
Traders also said several cargoes of optional-origin wheat bought by Algeria would be loaded with US hard red winter wheat rather than French wheat as initially expected. "You can expect a sharp slowdown in port loadings in France," one trader said. German prices were little changed but with premiums weakened by this week's arrival of long-awaited warm spring weather and reports that grain plants had not suffered as badly as feared from the long winter.
Standard milling wheat for April delivery in Hamburg was offered for sale unchanged at 251 euros a tonne with buyers at about 249 euros. "Selling premiums have fallen from about 8 euros over Paris at the start of the week to 6 euros," one trader said. "It looks like crops have survived the long winter without the sort of widespread damage we saw last year and the weather is now much more favourable for crop development."
"Domestic wheat demand rather than exports are currently the main driving factor. We are seeing robust demand from flour mills and feed makers." Purchase interest from feed compounders kept feed wheat prices close to or above milling wheat in parts of Germany.
Feed wheat for April-June delivery in the South Oldenburg market near the Netherlands was offered for sale unchanged at 262 euros a tonne with buyers at 260 euros. Germany's feed industry is currently generally only buying feed grain supplies for nearby delivery dates on belief prices will fall as big harvests in 2013 are likely, a senior feed industry association representative said on Thursday.