EU wheat prices climb to 3-year high as crop outlook dims
- Strategie Grains cuts forecast for EU soft wheat crop
- Wheat prices also boosted by crop problems in Russia
- U.S. govt aid to soybean farmers seen underpinning prices
Wheat futures rose on Wednesday in a market buoyed by diminished crop outlooks in the European Union and Russia and signs that buyers are stepping up purchases in the expectation that prices could climb further.
Soybean futures were slightly lower in a modest setback after the prior session’s gains, while corn prices edged up.
December milling wheat on Paris-based Euronext was up 1.50 euros or 0.8 percent at 198.50 euros a tonne at 1024 GMT, after rising to a peak of 200 euros, the highest price for the second position since July 2015.
Analysts Agritel said there were serious concerns about crops “from the Atlantic to Urals” and although they remain mainly focused so far on Europe and the Black Sea “this is enough to change the game”.
Consultancy Strategie Grains has again cut its estimate for this year’s EU soft wheat crop, which is now expected to be below 130 million tonnes versus 132.4 million tonnes estimated in early July, it said on Wednesday.
This would be the lowest soft wheat harvest in the 28-member bloc since 2012, analyst Laurine Simon told Reuters. The EU harvested 141.8 million tonnes of soft wheat in 2017.
In Russia, the world’s top wheat exporter, yields are around a three-year low, according to agriculture consultancy SovEcon.
Dealers cited Egypt’s purchase of 420,000 tonnes of wheat at a tender on Tuesday as evidence that buyers may be stepping up purchases in case prices rise further.
The Chicago Board Of Trade most-active wheat contract rose 1.6 percent to $5.18-1/4 a bushel.
CBOT soybeans slid 0.5 percent to $8.68-1/2 a bushel, having firmed 1.2 percent on Tuesday.
Losses in the soybean market were limited by the Trump administration’s plan to provide up to $12 billion in aid to shield farmers from economic pain stemming from trade disputes.
The programme will include direct payments for farmers, and those who grow soybeans are expected to be the biggest beneficiaries, according to the U.S. Department of Agriculture.
“Farmers could now use the announced funds for example to store soybeans rather than sell them off cheaply. This would reduce supply on the market and shore up the price,” Commerzbank said in a market note.
CBOT corn futures were up 0.6 percent at $3.68-1/4 a bushel as the market resumed its recent advance after a setback on Tuesday.
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