Euronext wheat futures rose slightly on Thursday, supported by the risk of further weather damage to the harvest in European Union countries. Prices were recovering from a near two-week low this week, with traders looking ahead to monthly crop forecasts from the US Department of Agriculture on Friday for clearer direction.
Front-month September milling wheat on the Paris-based Euronext exchange unofficially closed up 1.25 euro or 0.8 percent at 168.00 euros a tonne. The more active December contract ended 1.75 euros higher at 171.50 euros. Strategie Grains on Thursday slashed its estimate of the EU soft wheat harvest by 7.7 million tonnes to 137.9 million as it factored in a "disastrous" crop in France and disappointing yields in Germany and Britain.
It also lowered its outlook for this year's EU barley and maize crops. "There is still concern about the overall size and quality of the European wheat harvest and now the maize crop is also at risk, with a lack of rain since the flowering stage," a French cash broker said. Rain delays to harvesting in northerly zones in France added to uncertainty and there were now concerns that wet conditions may lead to weak Hagberg falling numbers, a measure of the milling quality of wheat, traders said.
In Germany, rain also continued to hamper harvesting. "We had showers again today and rain is forecast up to Sunday in northern regions where a lot of wheat still remains to be harvested," one German trader said. "It looks like the harvest will suffer quality loss but damage will be very regional, a lot of quality sorting will need to be done on new crop deliveries from farmers."
A decent crop is still possible but dry, sunny weather is urgently needed and is not forecast until Monday/Tuesday, he said. German cash market premiums in Hamburg were cut to compensate for the overnight strength in Paris. Standard wheat with 12 percent protein content for September delivery in Hamburg was offered for sale at 0.5 euro over the Paris December contract against 1 euro over on Wednesday. Buyers were seeking level Paris with new crop trades reported around 170 euros.
Friday's USDA report will be watched for adjustments both to weather-reduced western European crops and bumper harvests in Russia and the rest of the Black Sea region. In exports, the EU reported 450,000 tonnes of weekly soft wheat export licences. This took the total so far in 2016/17 to 2.2 million tonnes compared with 2.3 million a year ago.