EU Wheat Eases Before USDA Report, Traders Assess Weather Damage

August 10th, 2018


Category: Grains, USDA

(Reuters) – Paris wheat futures fell for a second day on Thursday, giving up some of the recent gains fueled by torrid weather in Europe, while traders awaited fresh direction from U.S. government grain forecasts.

Benchmark December milling wheat on Paris-based Euronext unofficially closed down 2.50 euros, or 1.2 percent, at 212.75 euros ($245.94) a tonne, moving away from last week’s 5-1/2 year peak of 219.25 euros on a continuation chart.

Falling U.S. futures encouraged the weaker trend as grain markets awaited Friday’s U.S. Department of Agriculture (USDA) monthly crop report.

Chicago wheat found little direction in hesitant trade as investors shifted attention to Friday’s report.

The USDA report will be closely watched both for revisions to U.S. corn and soybean yields and adjustments to world wheat supply after severe weather in key export zones like Europe, Russia and Australia.

Underlining weather damage in Europe, Strategie Grains again sharply cut its estimate for this year’s soft wheat harvest in the European Union, notably citing “catastrophic” yields in Germany and Scandinavia.

The analyst firm also cut its projections for wheat exports and feed use, while anticipating record maize imports to help make up for tight wheat and barley supplies.

This came a day after Germany’s farm cooperatives association said the country’s grain harvest will be the lowest in 24 years due to drought and hot weather.

“It looks like Germany will have to reduce its export business in coming months and meeting domestic demand will be the main priority,” one German trader said.

German trading group BayWa on Thursday hinted it may have to move away from German wheat, perhaps turning to the Black Sea region in coming months to supply export customers.

New crop standard bread wheat with 12 percent protein for September delivery in Hamburg was offered for sale unchanged at 5 euros over Paris December.

Feed wheat in Germany’s South Oldenburg market for September/December was offered for sale well over milling wheat at around 229 euros a tonne, with buyers seeking 227 euros.

In Poland, prices have risen sharply in the last week on fears the Polish crop has also suffered heavy drought damage.

Polish millers increased purchase offers by 100 zloty in the past week to 820-880 zloty a tonne (191.8-205.9 euros) for 12.5 percent protein wheat for immediate delivery.

“Mills cannot buy enough due to lack of supplies,” one Polish trader said.

“Harvesting is about 80 percent finished and only north and north-east Poland are still busy with threshing. All other regions are counting, separating quality and storing rather than selling,” the trader said.

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