Euronext wheat futures eased on Friday as the market consolidated after a volatile week during which weather risks and a falling euro pushed prices to a 10-month high. The start of winter wheat harvesting in the southern US plains and signs of rain relief for North American spring wheat helped pushed Chicago futures lower and shift the focus away from dry weather in several exporting countries.
December milling wheat, the most active contract on the Paris-based Euronext exchange, settled 1.25 euros, or 0.7 percent, lower at 185.00 euros ($215.75) a tonne. The contract was also down slightly over the week having given up gains made when it rallied to a 10-month high of 190.50 euros on Tuesday.
Traders remained focused on the euro, which slid to a 10-month low against the dollar this week amid political tensions in Italy, and crop weather, with dry conditions continuing to raise concern about yield losses in the Black Sea region and central Europe. "The exchange rate could set the tone next week," a French cash broker said. "For the weather, it's too dry in eastern Europe as far as eastern Germany. Western Europe is unscathed for now."
Smaller wheat crops are expected in both Russia and Ukraine this year. In the European Union, warm weather has boosted wheat crops in countries like France after a damp, chilly start to spring, but dryness is a risk in Germany and Poland, analysts said. The European Commission lowered its monthly forecast of this year's EU common wheat, or soft wheat, crop to 140.3 million tonnes from 141.5 million.
In France, 80 percent of soft wheat was in good or excellent condition, according to farm office FranceAgriMer. In Germany, the lack of rain in parts of the country was dominating attention. "Concern is increasing about dryness in parts of north and east Germany which could reduce yields in export regions," one German trader said.
"There has been a lot of rain in Germany in the past couple of days but not much in the northern and eastern regions suffering from dryness," the trader said. "A rainy June is now needed otherwise yield reductions will be on the cards." Standard bread wheat with 12 percent protein content for May delivery in Hamburg was offered for sale unchanged at 8 euros under Paris December.
In export news, Algeria bought in a tender of between 90,000 and 120,000 tonnes of milling wheat for shipment in the first half of July, with the grain most likely to be sourced from France, traders said.