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Subdued EU wheat market awaits Algeria tender, USDA dataqrcode

May. 12, 2020

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May. 12, 2020
European wheat futures edged lower on Monday in thin trading as the market waited for U.S. government crop data for more clues on supply and demand and the outcome of a wheat tender by Algeria.

Traders were also assessing the impact of rainfall across Europe that has brought much needed moisture after a long dry spell but some observers are pointing to damage already suffered by crops.

September milling wheat on Paris-based Euronext settled 0.25 euro, or 0.1%, lower at 188.00 euros ($203.15) a tonne.

It continued to face technical resistance from nearby chart gap, dealers said.

The expiry of May futures, the last position for the 2019 crop, at the end of the session contributed to the hesitant trend on Euronext. The spot contract provisionally closed at 200.00 euros, down 0.50 euro on the day.

A public holiday in major grain exporting countries Russia and Ukraine also curbed activity on European wheat markets.

The return of rain in Europe has averted significant damage to wheat, analysts and traders said last week.

But some crop watchers have pointed to irreversible damage to wheat in parts of the Black Sea region, including in Russia and Romania, while others say conditions remain dry in northerly parts of France and Germany, top European Union producers.

“The rain’s return has only stabilised harvest yield potential that is now less than was expected at the end of winter,” French consultancy Agritel said in a note.

“The two months left before the harvest can throw up some surprises, so a bit of risk premium is being maintained in prices.”

Grain markets are awaiting the U.S. Department of Agriculture’s May outlook on Tuesday, in which the USDA will update its U.S. and world estimates for the current 2019/20 season and give first supply and demand projections for 2020/21.

The U.S. government crop data may provide more indications on Chinese imports and the effects of the coronavirus crisis on grain demand in areas like livestock feed, biofuel and out-of-home eating.

A wheat tender to be held on Tuesday by Algeria, the largest buyer of EU wheat, will also be closely watched as the country’s grain agency OAIC makes a second attempt to start its 2020/21 import campaign after failing to buy in a previous tender for shipment this summer.

Weekly EU data showed the bloc’s soft wheat exports, including Britain, in the 2019/20 season that ends on June 30 had reached 29.15 million tonnes, up 61% compared with the year-earlier level.

$1 = 0.9254 euros

Reporting by Gus Trompiz in Paris

Source: Reuters

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