June 29, 2006
European cash wheat stable to higher
European new crop, cash wheat prices were mostly steady to slightly higher Wednesday (Jun 28), in a small recovery from Tuesday's decline.
Traders pointed to a continued lack of producer selling and psychological support from Tuesday's rally in US wheat futures.
French standard new crop wheat, delivered Rouen, was steady at EUR109.50 a tonne for July/August delivery. Meanwhile, wheat basis October/December delivery was mostly up EUR0.50 at EUR111.50/tonne.
Overall the cash market remained in a "wait-and-see" mindset ahead of harvest, keeping physical dealings limited.
"Farmers are not selling; they say prices are too low," said a German trader. "They expect a firmer market."
In Germany prices were also near steady, with sellers wanting EUR116/tonne for new-crop B-quality standard wheat delivered Hamburg, but buyers are only willing to give EUR115/tonne.
The German trader added that buyers there also remain on the sidelines due to more competitive prices from the Black Sea and France.
Traders pointed out that producers and end-users continue to focus on different fundamentals. They said producers are eyeing the recent hot conditions, further highlighted by coverage of the heat during the World Cup in Germany. Meanwhile, end-users focus on how rain this past weekend has been favourable for the crop.
"It has not rained everywhere, but almost everywhere," said an EU grain trader.
The German trader added that the crop there is currently in good shape despite the heat. He figures normal winter wheat production of 24 million to 25 million tonnes in Germany.
Overall wheat and barley remain cheaply priced compared to corn, but traders said the market is waiting to see how much quality wheat versus feed wheat is harvested this season.
French milling wheat was slightly higher Wednesday. November closed up EUR0.25 at EUR116.00/tonne with 379 lots traded.
London feed wheat was unchanged with November at GBP75.00/tonne with just 61 lots moved.
