IKAR in Mass and Industry Media

EU wheat tracks Chicago after bullish USDA report

Reuters

PARIS, Jan 14 (Reuters) - European wheat futures jumped on Monday to trace a rise on U.S. markets after the U.S. government put winter wheat sowings in the country below market expectations and warned of dryness in the U.S. Plains.

By 1231 GMT, front month March on Paris-based milling wheat futures <0#BL2:> was 1.6 percent higher at 248.75 euros a tonne. That was still around 10 euros below its price one month ago and 20 euros lower than two months ago.

The U.S. Department of Agriculture estimated U.S. winter wheat seedings at 41.82 million acres in its monthly report on Friday, 2 percent less than expected.

"We continue to adjust to the report released late on Friday, leaving us little time to react," one trader said.

A rise of the euro against the dollar kept a lid on prices, however, as it hampered European grains' competitiveness on export markets.

"The euro is acting as a brake but it is very volatile," another trader said.

The euro hit an 11-month high against the dollar on Monday and extended gains versus the yen as the European Central Bank dampened the chances of a euro zone rate cut.

Traders also said they would monitor hedge funds' rebalancing between commodities and equities markets, which could continue to hit grains prices.

Algeria's state grains agency OAIC has issued a tender to buy optional-origin milling wheat for shipment in March and April in which U.S. hard wheat could be in strong competition with French wheat, Algiers' traditional supplier, traders said.

"We will have to take account of the U.S. It's not a done deal," a trader said.

Prices for Russian export wheat in the shallow-water ports of the Azov Sea have exceeded prices for some U.S. and French export wheat, the Institute for Agricultural Market Studies (IKAR) said on Monday.

GERMANY

* German wheat retained large premiums over Paris, with prices firming in line with Euronext as the impact of Friday's USDA report continued to be felt.

* Standard milling wheat for January delivery in Hamburg was offered for sale up 4 euros and well over Paris at 264 euros a tonne with buyers at around 262 euros.

* "The USDA report is being view as bullish for wheat and corn while a neutral impact is seen for soybeans," a German trader said. "The lower U.S. wheat stocks also forecast will be supportive of the EU export outlook, although the strong euro at this time of EU export optimism is disappointing."

* Traders noted the absence of Russian and Ukrainian wheat in Iraq's wheat tender as the two countries withdrew from the export market following their poor harvests in summer 2012.

* Australian wheat was offered at the lowest price of $384.88 a tonne, cost and freight included liner out in Iraq's tender to purchase a minimum 50,000 tonnes of milling wheat, European traders said on Monday. German wheat was offered at $409.27 a tonne C&F liner out.

* "Interestingly the German wheat in the Iraq tender was said to have offered by the Ukrainian trading house Nibulon," another trader said. "Maybe some of the Black Sea export houses are moving out of their traditional markets to source in other regions as they have little to sell from their home countries."

* Repeated demand and tight supplies again kept German feed wheat around the same level or even above milling prices.

* Feed wheat for January-March delivery in the South Oldenburg market near the Netherlands was offered for sale up three euros and above milling wheat at 269 euros a tonne with buyers at 266 euros.

14.01.13

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