January 19, 2018 / 6:21 PM / 4 months ago

EU wheat drifts lower as U.S. exports keep mood subdued

PARIS (Reuters) - Euronext wheat edged lower on Friday as disappointing U.S. export sales added to worries about a supply-demand imbalance in a quiet session marked by a gathering of the French grain trade.

March milling wheat, the most active contract on Paris-based Euronext, settled 0.50 euro, or 0.3 percent, lower at 155.25 euros ($189.93) a tonne.

The contract posted a 1.3 percent weekly loss after a see-saw week that saw it fall to a life-of-contract low of 154 euros before rebounding mid-week and then retreating again from Thursday.

Activity on Friday was light, with many French market participants away from their desks attending a new year trade event in Paris.

Lower than expected weekly U.S. wheat export figures, which confounded hopes that recent price lows would stir extra demand, helped push Chicago wheat lower after a two-day rebound.

“That’s three poor weeks in a row for U.S. exports,” one futures dealer said. “With such a firm euro-dollar rate there’s no chance of Euronext rallying more,” he added.

The euro, which hit three-year highs against the dollar this week, has given a further headache to western European exporters already struggling with competition from Black Sea origins such as Russian wheat.

European Union soft wheat exports so far in 2017/18 are running 19 percent behind last season’s pace, and analyst firm Strategie Grains on Thursday again cut its monthly outlook for EU soft wheat exports this season.

In Germany, weak export demand was helping keep port prices below inland markets.

Standard bread wheat with 12 percent protein content for February delivery in Hamburg was offered for sale unchanged at about 5 euros over Paris March.

On the South Oldenburg market, meanwhile, feed wheat for February delivery was offered for sale unchanged at around 171 euros a tonne, with buyers seeking 170 euros.

“Inland prices in Germany remain higher than in ports, with the highest prices for wheat in north Germany again offered by animal feed makers,” one trader said.

There was still concern about waterlogging posing a threat to wheat crops in parts of north Germany after heavy rain since last summer.

“Heavy snow fell on Thursday in north Germany which has started to melt again, adding yet more water to fields,” another trader said.

“No actual damage has been reported but concern is rising.”

Reporting by Gus Trompiz in Paris and Michael Hogan in Hamburg; Editing by Mark Potter

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