EU wheat prices fall on firm euro

European wheat futures fell on Monday, depressed by a firm euro and rising crop estimates in France and Russia, while the market was also keeping a close eye on the rain-hit harvest in Germany. December milling wheat, the most active contract on the Paris-based Euronext exchange, was down 1.25 euros, or 0.7 percent, at 167.75 euros a tonne by 1554 GMT after setting a contract low of 167.50 euros.

"The euro is contributing to the trend of course," one futures dealer said. "There's also a lot of people trading the spread between Paris and Chicago wheat." Chicago wheat rose on Monday after falling for the past five sessions. The euro was higher against the dollar, recouping some of its losses from Friday when it had pulled away from a 2-1/2 year high struck earlier last week.

Good harvests in France and Russia weighed on prices, although the risk of widespread rain damage to the German crop could lend support going forward, traders said. France's farm ministry raised its estimate of the country's 2017 soft wheat crop to 36.8 million tonnes from 36.2 million a month ago, confirming a rebound from last year.

Traders also noted the potential for increased competition from the Black Sea region following an improved crop outlook, particularly in Russia. In Germany, market attention remained on the repeated rain which has delayed harvest progress and caused concern about last minute quality loss.

Rain, often heavy, fell most days last week on ripe wheat waiting to be harvested. "I think the rain in the last week and this weekend finally moved the market's opinion from expecting a pretty decent harvest to expectations of poor quality," one German trader said. "The rain was at the worst possible time."

"Farmers are making the best of dry periods to harvest as much wheat as possible but the weather forecast this week is again for rain up to Friday which is not creating hopes of a quick turnaround." Standard bread wheat with 12 percent protein content was offered for sale unchanged at 3 euros over the Paris December contract for September delivery in Hamburg. The rainy weather was keeping premiums for high quality wheat well above standard milling grades.

(Source : Reuters)