May 4, 2006

 

Europe cash wheat steady as traders await tender results

 

 

European cash wheat prices were mostly steady Wednesday with most traders on the sidelines waiting for the results of Thursday's (May 4) European Union grain tender.

 

French spot standard wheat, basis Rouen, was mostly steady with bids at EUR104.00 a tonne and most offers at EUR104.50/tonne.

 

In Germany, spot feed wheat delivered in South Oldenburg remained around EUR130.00/tonne. And spot German B-quality and/or feed wheat  delivered to Hamburg stood at EUR119.00/tonne.

 

For Thursday, traders are keen to see if the EU continues to offer restitution a maximum of EUR5.00/tonne, especially as the euro remains strong versus the US dollar.

 

Concerns are that the relative strength in the euro is making EU wheat less attractive on the export market.

 

"Everyone is watching currencies," said a UK wheat broker.

 

There are also concerns that the window to export is narrowing with harvesting quickly approaching in key importing regions of Northern Africa.

 

Amid tightening feed wheat supplies, there has been more pressure for the EU to release old crop stores tied up in intervention. Ideas have been that about 200,000 tonnes could be released onto the domestic market soon.

 

"It may be a good idea," said a French grain trader. "It's harder and harder to find cheap grain for feed."

 

The trader speculates that domestic feed compounders still need to cover needs for part of May and all of June. After boosting prices in April, domestic feed demand has tailed off in recent days.

 

Prices were mostly higher in wheat futures. Brokers said prices have been supported technically as nearby tightness in the cash market has meant some traders have been caught short in front-month May.

 

French May milling wheat was up EUR0.50 at EUR114.25/tonne with 627 lots traded. There was no volume reported in the November contract.

 

London May feed wheat was up GBP0.75 at GBP75.75/tonne with 33 lots traded, while November was flat at GBP73.50/tonne with 41 contracts moved.

 

Warmer weather late this week is expected to favour wheat growth in western Europe. Traders reported cool and rainy conditions in France earlier this week. Development has been slow this season, especially in eastern Europe.