May 10, 2006

 

European cash wheat prices stable to higher on increased feed demand

 

 

European cash wheat prices were steady to slightly higher Tuesday (May 9) due to a pick up in domestic feed demand.

 

French spot standard wheat, basis Rouen, was mostly up EUR0.50 at between EUR104.50 to EUR105.00 a tonne.

 

"Demand from Belgian and Dutch users is surging again," said the Infograin daily report.

 

A French trader said while the compounders are covered for the rest of May they still need to fill some needs for June. Still, the trader also points out that overall volume of Tuesday's physical was fairly small.

 

German B-quality wheat, basis spot, stood steady at EUR120.00/tonne.

 

Outside of the feed wheat demand, very little was taking place. Traders reported a quiet export front and very few dealings in fellow barley and corn markets.

 

Export figures out of France's main port of Rouen showed 488,997 tonnes of wheat were shipped out during April, down 9.6 percent for the same period last year.

 

After an early slip both the euro and pound gained against the US dollar Tuesday to trade near recent highs. The strength in the euro and British pound is seen making EU wheat less competitive on the world export market.

 

In the UK, feed wheat  remains difficult to buy, but there is still an ample amount of milling wheat. Traders said milling wheat hasn't been moving out as some had expected as export prices are currently uncompetitive.

 

"You cannot buy feed wheat and you cannot sell milling wheat," a UK trader said.

 

The trader expects to see a drop back in feed wheat prices, which are currently about GBP5/tonne discount to milling wheat, as domestic consumers are nearly covered.

 

UK feed and milling wheat prices for old crop are still about GBP10/tonne higher than new crop prices, the trader adds.

 

For the new crop, warmer weather in Germany has favoured development, but cooler temperatures in France have slowed plant growth.

 

"(The cool temperatures) are not doing any harm to the crop, but it needs to be warmer," said a French trader.

 

In European futures, May French milling wheat was up EUR0.50 to end at EUR114.25/tonne with 99 lots moved. November was flat at EUR114.50/tonne with 288 contracts traded.

 

London May feed wheat settled up GBP0.10 at GBP76.00/tonne with 84 lots traded. And November ended unchanged at GBP73.65/tonne with just 10 lots moved.

 

In the competing Chicago soft wheat futures, prices climbed to a near one-month high, following the US hard wheat markets due to lower weekly crop condition reports.