European wheat futures in Paris fell on Tuesday to approach contract lows, hit by an export-punishing surge in the euro's value and fall in US prices. The drop was restrained, however, by the slow rate of new-crop sales by French farmers, remembering last year's weather-damaged harvest which left some unable to deliver quality promised in advanced sales.
Benchmark December milling wheat on the Paris-based Euronext exchange was down 1.00 euro or 0.5 percent at 170.25 euros a tonne at 1546 GMT, near the contract low of 169.25 euros. "The striking thing is the very low level of deals for the new crop," a French trader said. "This is affecting both industrial users and traders, with farmers very cautious and still marked by the crop disaster of last year."
"The question is whether the buyers or sellers will budge first." Traders were also taking a relaxed view of hot weather in France, given that summer-style temperatures across the country are expected to fade by Thursday and had come after beneficial rain in the past two weeks that eased drought concerns. In Germany, cash market selling premiums in Hamburg were little changed with sales of milling wheat again being made to the animal feed industry because of high prices for feed wheat.
Standard wheat with 12 percent protein content for May delivery in Hamburg was offered for sale unchanged at 1 euro over the Paris December contract. Buyers were seeking parity with Paris. "There is again stronger demand from the animal feed industry than from exporters and flour millers so milling grade wheat is simply being sold as feed," one German trader said. "Wheat is a commodity and goes to the buyer offering the highest price."
Feed wheat for May delivery in Germany's South Oldenburg feed wheat market was quoted about 9 euros over Hamburg milling wheat on Tuesday at around 181 euros a tonne, with strong demand reported from feed makers in much of north Germany. "This price difference is too big to ignore especially as feed makers have lower quality specifications than the milling industry," the trader added.