Source: Ukragroconsult (Ukraine)
Wheat prices on Euronext fell to a two-month low on Monday as ample offers of Black Sea supplies in the ongoing Egyptian tender underscored export competition despite Russia’s measures to impose minimum prices on overseas sales.
December food wheat futures on the Paris-based Euronext exchange fell 1.5 percent to 213.75 euros ($232.82) a metric ton, dropping for a fourth straight session.
At the close of trading, the contract reached 213.25 euros, its lowest level since September 3.
The sharp rise in the EUR/USD also put pressure on Euronext, making exports of Western European grain more expensive. A corresponding fall in the dollar exchange rate helped Chicago wheat to rise.
“I think the market is being pressured primarily by the volumes on offer (for Egypt),” said one futures trader.
While bids for Russian wheat were uniformly priced, suggesting a floor price was applied for export, there were bids for other Black Sea wheat varieties that were also cheaper than French wheat in the tender.
“Today’s Egyptian buying tender was further proof of the dominance of Black Sea wheat in export markets,” said a German trader.
“Bids for French wheat were more expensive than Russian wheat despite the impact of the unofficial Russian minimum export price, while Ukrainian and Romanian wheat were also cheap.”
While France has a shrinking surplus this year due to a poor harvest, there are concerns about the lack of export sales, especially after Algeria reportedly ignored French wheat in its second consecutive tender last week due to diplomatic tensions with France.
“Argentine and Australian new crop wheat will increasingly enter the world market as the southern hemisphere harvest increases in the coming weeks, so the west of the EU is likely to face even tougher export competition,” added another German trader.
The improving weather outlook for wheat in the northern hemisphere, including predicted rain in the dry grain belts of Russia and the US, as well as drought in the French wetlands, also kept prices in check.