European wheat futures rose on Friday on spillover support from a rally in U.S.
prices as operators anticipated importers would increasingly turn to the United States and western Europe once
supplies from the drought-hit Black Sea region run low.
* Reduced yield estimates by influential forecaster Informa Economics for U.S. corn and soybean crops also
supported grain markets by highlighting tightening global supply in the wake of the worst U.S. drought in 56
years.
* Benchmark November milling wheat on the Paris-based futures market was up 3.25 euros or 1.24
percent at 264.75 euros a tonne, adding to a smaller rise on Thursday.
* The market remained, however, in a consolidation range between 260 and 270 euros that has held in the
past month.
* On the U.S. market, Chicago new-crop wheat futures moved decisively higher after Informa’s estimates to
extend a 2.8 percent rally on Thursday.
* Despite losing out again to Black Sea origins in a latest tender purchase by Egypt on Thursday, U.S. and
western European wheat markets were boosted by the prospect of this demand shifting towards them as
drought-reduced supply in Black Sea exporters Russia and Ukraine dries up.
* Egyptian state buyer GASC bought 475,000 tonnes of wheat from Russia, Romania and Ukraine, after buying
355,000 tonnes of wheat from the same countries only last Saturday.
* “This tender showed that Russian prices are much less aggressive for further-away deliveries from
November,” French consultancy Agritel said. “Thus, the country’s export activity should soon slow down
regarding the very low wheat harvest.”
* GASC itself underlined the prospect of other countries winning sales to Egypt, notably France.
* “We can see that the Russian bids were much less for November shipment … That means that more
purchases from France during that period will be very probable,” Vice Chairman Nomani Nomani said.
* The favourable export outlook, together declining global grain supply after the drought in both the
United States and Black Sea countries, allowed Paris prices to shrug off a sharp rise in the euro against the
dollar, which makes grain from the euro zone more expensive for export.
* The euro, which rose on Thursday in reaction to bond-buying measures unveiled by the European Central
Bank, extended its rally against the dollar as weaker-than-expected U.S. job data fuelled expecations of the
Federal Reserve will inject more money into the economy.
* Despite healthy export prospects, heavy flows from the Black Sea were keeping export activity in France
relatively quiet for now, operators said.
* With port silos brimming, there were concerns about storage space as the maize harvest approached,
French traders said.
* “Logistically, it’s not going to be easy to manage, the silos are full,” a cash broker said.
GERMANY
* German prices were also supported by export hopes.
* Standard milling wheat for September delivery in Hamburg was offered for sale up 1 euro at 268 euros a
tonne with buyers at around 266 euros.
* German Farming Association DBV on Friday also said it expects continued firm prices.
* “Forecasts of reduced harvests in south and southeast Europe coupled with the far too wet harvest
conditions in Britain mean that a continued firm price trend can be expected,” the DBV said in a report after
a harvest meeting with experts including trading house Toepfer International.
*”German wheat is highly competitive in international competition as the generally weak euro is increasing
sales opportunities in third countries,” the DBV added.
* Firm German feed wheat prices again supported the milling market.
* German feed wheat in the South Oldenburg market close to the Netherlands was again quoted close to
milling wheat, offered for sale up 2 euros at 266 euros a tonne for nearby delivery with buyers around 264
euros.
* “The feed grain sector remains firm with the impact of the reduction in the U.S. corn crop still
filtering though,” another trader said. “With a better quality harvest than expected in Germany, feed wheat
supplies are generally tight and are meeting continued demand from feed makers.”
* Prices as of 1559 GMT
Product Last Change Pct Move End 2011 Ytd Pct
Paris wheat 264.75 3.25 +1.24 195.25 35.60
London wheat 205.00 0.10 +0.05 152.25 34.65
Paris maize 253.50 -0.50 -0.20 196.75 28.84
Paris rape 518.00 -0.50 -0.10 421.50 22.89
CBOT wheat 883.00 11.00 +1.26 652.75 35.27
CBOT corn 795.25 -2.00 -0.25 646.60 22.99
CBOT soy 1738.00 -6.50 -0.37 1198.50 45.01
Crude oil 96.31 0.78 +0.82 98.83 -2.55
* Paris futures in euros per tonne, London wheat in pounds per
tonne and CBOT futures in cents per bushel.
