EU wheat hits new five-month low as Black Sea pressure persists
PARIS, Aug 21 (Reuters) -Euronext wheat fell to a fresh five-month low on Wednesday as strength in the euro and competition from cheaper Black Sea supplies pressured prices, traders and analysts said.
December wheat BL2Z4, the most active position on Paris-based Euronext, was down 1.9% at 212.00 euros ($236.27) a metric ton by 1610 GMT.
The contract earlier dropped to 211.50 euros, its lowest since March 15 after breaching chart support around 215 euros that had held amid previous five-month lows this week.
Front-month September futures BL2U4 were 2.1% down at 199.75 euros, after setting a five-month low at 199.25 euros as it tested the psychological 200-euro floor.
Chicago wheat Wv1 also fell, despite weakness in the dollar. GRA/
The euro EUR= hit another 2024 high against the dollar above $1.11 before consolidating, as the exchange rate continued to weigh on the export chances of western European wheat.
A wheat import tender held by Tunisia on Wednesday, meanwhile, underscored the competitiveness of Black Sea origins, which were expected to fill the 75,000-metric-ton order made by Tunisia.
“The euro’s strength is disappointing at a time when prices offered by Black Sea exporters are so low and international demand slack,” one German trader said.
"While overall wheat shipment volumes from Russia are running at a smaller volume than expected, Russian wheat is still being offered aggressively cheaply and Russia is winning a lot of the business for spot nearby export demand.”
Russian 12.5% protein for September Black Sea shipment was selling on Wednesday at around $217-$220 a ton FOB, traders said.
Russia may harvest less wheat than forecast following adverse weather, Agriculture Minister Oksana Lut said on Tuesday, though she maintained for now the government's harvest estimate of 86 million tons.
Large anticipated harvests in Russia, Ukraine and North America have taken attention away from rain-hit crops in France and Germany.
Slow early-season exports in western Europe have raised concern that demand may be insufficient even to cover a reduced harvest surplus.
"Unless demand picks up, there is still potential for prices to fall," Argus analyst Maxence Devillers said.
Financial investors extended their net short position in Euronext wheat last week, data showed on Wednesday.
($1 = 0.8973 euro)
Reporting by Gus Trompiz in Paris and Michael Hogan in Hamburg; editing by Jonathan Oatis
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