EU wheat drops to a two-week low due to Russian supplies
Euronext Wheat Futures dropped on Wednesday, reaching a new two-week low. Improved harvest prospects and lower prices in the top exporter Russia continued weighing on sentiment.
Euronext's front-month September wheat settled at 220.75 Euros ($238.92 per metric ton) after hitting its lowest level since June 25, at 219.75 Euros.
The contract, just like on Tuesday when the price hit a low of two weeks before recovering, found support at 220 euros.
Chicago wheat prices also fell, as a rapidly moving U.S. harvest pushed down the price.
In Europe, the competition for cheaper wheat from Russia and other parts of the Black Sea Region offset concerns over a possible drop in France's production of wheat.
The low Black Sea prices that are being offered on export markets continue the trend of lowering sentiment, despite signs that west EU harvests have been affected by the wet summer. A German trader confirmed this and said a small purchase Algeria made Tuesday was likely to come from the Black Sea.
The trader stated that "Russian Black Sea Wheat 12.5% July shipment remains below $220 per ton FOB, at about $219 per ton. This is an attractive price for importers."
The widespread rain in Germany again on Wednesday, and the forecast of wet weather through the weekend was causing concern. German wheat crops needed sunshine before the harvest.
Another trader stated that "Rain caused a stop, start, stop barley harvest in Germany. There is concern over reduced yields even though maybe 80% winter barley was now gathered."
Rain has impacted barley yields, which are now looking poor. "Rapeseed harvesting has also begun, with disappointing yields."
The European Union's farming association Copa-Cogeca forecast that EU common wheat production will drop to 117.5 millions tons in 2024, the lowest level for six years.
Euronext published data on Wednesday showing that financial investors have taken a net-short position in Euronext Wheat. ($1 = 0.9220 euros) (Reporting from Gus Trompiz and Michael Hogan, Hamburg; editing by Chris Reese).
