PARIS: Euronext wheat futures were slightly higher on Tuesday, supported by a growing consensus that France will harvest its smallest crop in at least a decade and by signs that Black Sea export prices are rising.
Gains on Euronext were curbed by a near 10-year low for US prices, a rally in the euro against the dollar and ample global supplies of wheat.
Front-month September milling wheat on the Paris-based Euronext exchange settled 1.50 euros, or 0.9 percent, higher at 168.50 euros a tonne, while the December contract settled up 0.75 euro at 170.00 euros. Estimates of the weather-hit French soft wheat crop were converging in a 28 million to 30 million tonne range, which would be the lowest since at least 2003. The poor harvest is set to limit France’s export flows this season, and could allow French prices to trade above levels in other major exporting zones, traders say.
“Matif (Euronext) wheat is decorrelating from US prices because with our harvest we might be pretty much out of export markets until December,” one futures dealer said.
“The focus on Matif is the tipping point at which our prices are high enough to trigger possible imports of Romanian wheat. When you look at the offers in the Egyptian tender, Romanian prices have risen a bit so that gives us a bit of leeway.” A rally on Euronext to six-month highs in late July fuelled talk of imports of Romanian wheat, encouraging prices to correct downwards last week.
A tender on Tuesday by Egyptian state buyer GASC showed the cheapest offer of Romanian wheat was above that seen in a tender last week. GASC bought 60,000 tonnes of Russian wheat in the tender where only Black Sea origins were offered and French wheat was again absent.
Traders were waiting for harvesting to progress further in northerly French wheat belts to have a clear overall picture of the volume and quality of this year’s crop, which has suffered from torrential rain, limited sunshine and widespread disease.
Field work was again held up on Tuesday by showers in northern regions and harvesting may not resume until the weekend, traders said. On the US market, Chicago wheat futures sank to another 10-year low on large supplies and spillover from falling corn and soybean prices.
Euronext confirmed on Tuesday that it would add a new delivery point for its milling wheat futures at Rouen from September 2017.
