EU: Wheat futures end week higher on weaker euro, short-covering

Euronext wheat futures on Friday, March 15 posted a small weekly gain after a weaker euro and short-covering helped prices recover from a 3-1/2 year low linked to hefty global supply, the Business Recorder reported.

May milling wheat settled 0.5% up at 195.00 euros ($212.24) a metric ton. Over the week the contract was up 0.8% as it edged away from a 3-1/2 year low of 188.00 euros struck last week.

A fall in the euro against the dollar this week and adjustments by investors with large short positions helped underpin prices, as traders assessed whether the market is bottoming out before a crucial weather period for northern hemisphere crops.

News of cancellations and delays to orders of US and Australian wheat by Chinese buyers and continuing competition from cheaper Russian and Ukrainian supplies have capped gains.

“In summary, this market remains difficult to call. Bearish fundamentals provide resistance, whilst the technical market provides support,” British merchant ADM Agriculture said in a note. Chicago wheat edged lower, pressured by the dollar and disappointing export news, though it also held above a 3-1/2 year low.

In France, the state of soft wheat crops, already their worst in four years, declined slightly last week, data from farm office FranceAgriMer showed, as fields stayed soggy after a wet winter.

Heavy rain since late last year has disrupted planting and early crop development in France and other parts of western Europe. In Britain, the wheat area is expected to shrink by 15% from last year to its smallest since 2020, the Agriculture and Horticulture Development Board said on March 15.

In exports, French port data compiled by LSEG showed a first cargo of wheat for Egypt for several months was due to load in the coming days following a sale in a tender in January.

But after a brisk winter export programme marked by large shipments to China, traders are concerned that overseas demand for French wheat will be limited for the rest of the season.

The state of French soft wheat crops declined slightly last week to remain at their worst in four years, data from farm office FranceAgriMer showed on March 15, as fields remained soggy after a wet winter in the European Union’s biggest grain producer.

Some 66% of French soft wheat was rated as being in good or excellent condition by March 11, down from 68% a week earlier, FranceAgriMer said in a cereal report.

That was the lowest rating for the period since 2020, when 63% of soft wheat was rated good/excellent in another season marked by wet weather. Heavy rain since autumn has disrupted planting and early crop development in France and other parts of western Europe.

The wet weather led Strategie Grains analysts this week to cut its forecasts for 2024 soft wheat and barley production in the EU. FranceAgriMer also estimated that winter barley conditions were at their poorest since 2020, with 68% of crops rated good/excellent, down slightly from 69% the previous week.

Sowing of spring barley picked up after hardly progressing in previous weeks, with 39% of the expected area sown against 28% a week earlier, FranceAgriMer’s report showed. But spring barley sowing remained well behind both a year-earlier level of 99% and the five-year average of 83%.

FranceAgriMer does not comment on crop conditions in its weekly reports. But officials told reporters this week that the wet growing season had left crops in a varying state and was complicating sowing decisions.

17 March, 2024