August 23, 2012 / 12:35 PM / 5 years ago

EU wheat edges higher as Russia crop outlook dims

LONDON, Aug 23 (Reuters) - Wheat prices in western Europe edged higher on Thursday with prices in the market supported partly by a deteriorating outlook for crops in Russia.

* By 1152 GMT, front month November on Paris-based milling wheat futures <0#BL2:> was 0.1 percent higher at 267.00 euros a tonne.

* Wheat prices in Paris have risen around 1.5 percent so far this week, buoyed by concerns over possible export restrictions in the Black Sea region.

* News that Russia’s Agriculture Ministry cut its 2012 grain crop forecast to 75 million tonnes from 75-80 million tonnes was supportive.

* But analysts noted that the high euro, now above $1.25 was penalising for exports.

* The euro rose to a seven-week high against the dollar on Thursday, after business activity surveys in France and Germany were not as bad as feared, lifting some of the pessimism surrounding the region’s economy.

* Feed wheat futures in London also rose with November up 0.65 pounds or 0.3 percent at 207.50 pounds a tonne, within striking distance of a contract high of 208.75 pounds set on Wednesday.

* Dealers noted Britain’s wheat harvest remained well behind normal although steady progress has been made in eastern regions during the last few days.

* Crop consultants ADAS said in a report that the wheat harvest was 25 percent complete, as of the end of Tuesday.

* “The overall picture at present indicates that yields will be well below the five-year average at 7.1 to 7.5 tonnes per hectare. Light land crops have performed better than normal but there are a high proportion of heavy land crops that are disappointing,” the report said.

* “Quality of wheat samples harvested to date is poor.”

* German prices were firmed by the rise in Paris and strength in U.S. futures and also underpinned by hopes of new export demand on more bad news about Russian crops, although gains were capped by rapid harvest progress.

* Standard milling wheat for September delivery in Hamburg was offered up two euros and holding over Paris at 272 euros a tonne with buyers at around 270 euros.

* “Trades of 270 euros took place on Wednesday and I would not be surprised to see business at this level today,” one German trader said. “The overall strength in U.S. grains markets continues while the latest news about Russia’s harvest was again about a smaller-than-expected crop.”

* “The reduced Russian crop is likely to switch more export demand to Germany and other EU countries which will be supportive for prices.”

* “There is also hope that a good part of Iran’s latest wheat purchases could be sourced in Germany.”

* Germany’s own harvest outlook changed greatly after a burst of sunshine in the last two weeks enabled very fast progress to be made after repeated rain had delayed the harvest start.

* Germany’s 2012 grains harvest will rise 2 million tonnes on the year to 43.8 million tonnes, German farming association DBV said on Wednesday. Despite problems with repeated summer rain, a satisfactory crop had been gathered which will cover demand, the association said.

* “I estimate that about 95 percent of the German wheat harvest is now finished with the last regions in the north with about 20 percent of their area still on the fields,” another trader said. “I think this should be finished in the next couple of days.”

* “We are seeing some harvest selling pressure in parts of the country as the overall crop is said by the farmers’ association to be up around 2 million tonnes, only a matter of weeks ago a smaller crop had been expected.”

* German feed wheat prices have fallen below milling wheat. Feed wheat had been more expensive than bread wheat in past months as constant demand from feed makers met tight supplies.

* Feed wheat for August delivery in the South Oldenburg market near the Netherlands is now quoted well under milling wheat, offered for sale at 262 euros a tonne with buyers around 258 euros. (Reporting by Nigel Hunt in London, Sybille de La Hamaide in Paris and Michael Hogan in Hamburg; Editing by Helen Massy-Beresford)

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