Benchmark European wheat futures fell on Thursday to their lowest in almost two months, tracking a slide in Chicago as wheat markets shrugged off another surge in crude oil and focused on swelling global supplies. March milling wheat, the most active position on Paris-based Euronext, settled 2.25 euros or 1.4 percent lower at 164.25 euros a tonne, after earlier falling to 163.75 euros, its weakest level since October 10.
Spot December prices shed 1.1 percent to 160.25 euros a tonne, their weakest level since November 16. Chicago wheat dropped to new contract lows as ample international supplies and improved moisture for US wheat crops outweighed demand from importing countries.
"News of a potential record Australian crop threatening to win back export share into Asia is seen as negative to the overall global complex, as it would have to replace Black Sea wheat," UK merchant Gleadell said in a note. "Russia is still sitting on over 20 million tonnes, and with Turkey buying domestic stocks, the Egyptian private market out due to currency (issues), and Australia threatening to carve up the Asian market, the (Russian) government's export target of 30 million tonnes looks increasingly unrealistic."
Demand for EU wheat remained moderate, despite last month's slide in the euro against the dollar, curbing cash market premiums in western Europe, traders said. In Germany, standard wheat with 12 percent protein content for January delivery in Hamburg was offered for sale unchanged at 3 euros over the Paris March contract. Buyers were seeking 2 euros over.
"More export demand is needed to spark up the market but import demand is looking rather slack at the moment with hardly any tenders in the international market," one German trader said. "A ship is to load about 40,000 tonnes of wheat for Saudi Arabia in Hamburg but loadings are not big enough to excite the market," the trader said. Weekly European Union data showed that soft wheat exports this season had reached 10.2 million tonnes by November 29, up 9 percent on the year-ago level.
However, full-season EU exports are widely expected to drop sharply following a smaller harvest. The European Commission on Thursday cut its EU soft wheat export forecast to 24 million tonnes from 25 million a month earlier and compared with 32.7 million in 2015/16. The export cut led the Commission to increase its forecast for end-of-season wheat stocks, despite a downward revision to wheat production.