August 21, 2006

European cash wheat mostly steady, eyeing drop in US

European Union cash wheat prices were mostly steady Friday (Aug 18), especially in benchmark France. Traders said the market remained well-supported domestically but was treading nervously after the recent drop in US prices.

French standard wheat for Rouen was mostly unchanged at EUR124.50 a tonne for August-September delivery and at EUR126.00/tonne for October-December delivery.

Both millers and feed compounders are providing solid domestic EU demand, which is meeting a lack of producer selling.

"The story is all about the domestic market," said an European grain analyst. "Nobody really cares about the exports right now."

Still a French grain trader said the market is nervous as US futures prices, already said to be the cheapest origin, keep going lower.

While French wheat futures have risen back near the contract highs, soft red winter wheat futures at the Chicago Board of Trade fell Friday to their lowest levels since late January.

Traders said the EU market will still need a few more weeks to see how much of this season's crop will make the milling quality grade or will be used for feed. Rains continued late in the week in many parts of Europe, with wheat still left in the field in Germany and the UK.

Many will also be waiting for signs from the European Grain management committee when it returns from a holiday break at the end of the month.

UK feed wheat futures slipped to erase some recent gains but had very light volume. November UK ended down GBP0.45 at GBP81.65/tonne with a mere 41 lots moved.