July 17, 2006

European cash wheat steady, futures prices down with US market

European wheat prices trended lower Friday (Jul 14) following profit taking on the US market, but a holiday in France has kept physical market activity at a minimum, traders said.

With the French physical market closed, traders focused on futures prices moves, where November milling wheat futures traded on Matif fell EUR1 a tonne to EUR120.75/tonne with 109 lots traded.

CBOT prices tumbled on fund profit-taking Thursday and continued their slide on Friday, after concern for crop conditions in the US and Europe fuelled the recent run up in prices.

Hot and dry conditions during harvest time are believed to have lowered yields in France. Traders expected a downward revision of the French soft wheat crop, currently pegged at 35.3 million tonnes according to the French state grains board National Service Interprofessional des Grandes Cultures. The latest estimate issued this week was down 1.6 million tonnes on the previous month.

However, participants expected yields to improve once the harvest in the North and North West got underway.

Hot and dry weather causes kernels to lose moisture, reducing weight.

German traders were equally puzzled over size and quality of the harvest, leaving prices unchanged at EUR112/tonne for B-quality wheat, basis August and delivered Hamburg.

In the UK, Liffe feed November feed wheat futures settled at GBP78/tonne, down GBP0.40 with 85 lots traded.