EU Wheat Nudges Higher, Consolidating After Sell-Off

European wheat futures edged higher on Wednesday, digesting recent losses after investors banked profits from the sharp rally in June and July, with prices remaining underpinned by the US drought.

Benchmark November milling wheat on the Paris-based futures market traded up 1.50 euros or 0.6 percent at 256.50 euros a tonne.

Liffe milling wheat futures have fallen around 3 percent from Thursday’s close, tracking weakness in the corn and soybean markets, which took a breather from their drought-led rally after the market priced in U.S. Department of Agriculture production cuts Friday.

“On corn and beans we have some room on the upside, on wheat it’s hard to know because we’ve got so much around after the winter wheat harvest,” said Wayne Bacon, president of grain trader Hammersmith Marketing.

The latest Egyptian tender showed Russian and Ukrainian wheat remained the most competitively priced.

“France still has its regular markets in North Africa, it will continue to do business in Morocco, Tunisia and Algeria. Egypt has been a market of opportunity when the price is right,” Bacon said.

Operators are awaiting the outcome of Algeria’s third milling wheat tender in as many weeks.

Concerns remained over the possibility of the Russian government imposing export restrictions due to dry weather curbing production. In 2010 a drought triggered an export ban which lasted almost a year.

“Looking at the (Russian) situation today it doesn’t look like there’s going to be an export ban, but then it didn’t look like there was going to be one last time either,” said Hammersmith’s Bacon.

Russia’s exportable grain surplus of 10-11 million tonnes could run out by November if the country retains a high pace of exports in coming months, SovEcon agricultural analysts said on Wednesday, fanning fears about Russian export limits.

“People are very wary to commit to anything too far forward,” said a trader, adding there were not offers for Russian wheat for October shipment, in case of a ban.

In France, the European Union’s top wheat producer and exporter, harvesting was into its final stages, although the return of rain on Tuesday brought a further delay to unfinished wheat cutting in the far north.

The U.K.’s wheat harvest has begun and early results show patchy quality, dealers said.

“We’re not going to have anything like the harvest we had last year in terms of quality and quantity,” said a U.K.-based trader.

Liffe November feed wheat was unchanged at 195.00 pounds per tonne.

Reuters