February 21, 2024
European wheat futures hit 2-1/2 year lows amid supply pressure
European wheat futures faced continued decline, reaching 2-1/2 year lows after breaking through a key technical support level, due to ample stocks in Europe, compounded by stiff competition from Black Sea origins, Reuters reported.
The most traded May contract BL2K4 dipped by 1.5% to EUR 195.25 (US$210.25) per metric tonne, having earlier touched EUR 194.50 per tonne, a price unseen since September 2021. Meanwhile, US markets remained closed for the Presidents' Day holiday.
According to French consultancy Agritel, the competition between West European and Black Sea origins has intensified significantly. This heightened competition is driven by the search for adequate markets before the season concludes, amidst rising wheat stocks across Europe.
Analysts noted a continued decline in Russian wheat export prices last week, influenced by weakening global prices and a slight increase in shipments.
The recent uptick in French 2023/24 soft wheat stocks, reaching a 19-year high according to farm office FranceAgriMer's forecast, has further exacerbated supply pressure. Despite reports of poor French wheat output, particularly affected by adverse weather during the sowing campaign, next season's contracts have failed to find support.
FranceAgriMer data indicated that as of February 12, only 68% of French soft wheat was rated as being in good or excellent condition, the lowest for the time of year since 2020. France's agriculture ministry has estimated a significant decrease of over 7% in the country's soft wheat area compared to the previous year, marking its second-lowest level in 30 years.
A trader highlighted that the current focus remains on weak demand in the current season, contributing to the ongoing downward pressure on wheat futures.
- Reuters