PARIS, April 24 (Reuters) – European milling wheat futures were stable to slightly higher on Tuesday in the wake of a rise on U.S. grain markets, but volumes were thin as traders sought direction in the absence of new fundamental factors.
By 1533 GMT, front month May, the last contract for the 2011 crop on Euronext milling wheat futures <0#BL2:>, was unchanged at 215 euros ($280) a tonne, while the new crop benchmark November was 1.25 euro higher at 203.25 euros.
Traders put the next resistance on the November contract at 205 euros.
The spread between the two contracts narrowed, suggesting the closing of positions is well advanced on the old-crop contract, which expires on May 10.
“We are receiving some support from Chicago and weather worries in the United States for the weekend,” one Euronext trader said.
U.S. grains rallied early on Tuesday, supported by forecasts for cold weather that could damage Midwest crops, as well as a weakening dollar that boosted investors’ appetite for risky assets, traders said.
Recent rains in Europe could erode price gains, given that areas of France, north-east Italy and the UK are likely to get 80 millimeters this week, FC Stone Europe said in a note.
Spanish rainfall has been above average for three weeks in a row in northern regions, official data showed on Tuesday, which will help relieve wheat and barley crops after a long drought in the major grain importing country.
Traders noted that cold temperatures in France were slowing down growth of wheat plants, although this was not yet worrying for crops.
The French cash market was also quiet, with premiums falling to 2 euros from 4 euros last week for delivery to Rouen in May/June, and falling to zero for delivery in La Pallice from 6 euros last week. The premium in Eastern France remained firm.
“The market is very quiet. French wheat is still too expensive outside the EU. Due to a lack of activity, premiums are falling on the cash market,” one trader said.
In Morocco, a major importer, the agriculture minister said on Tuesday its cereals harvest should reach 4.8 million tonnes this year, far below last year’s level and the crop budget for 2012 but slightly above the most recent forecasts.
Ukraine has exported 1.75 million tonnes of grain, mostly corn, so far in April, after shipping 2.7 million in March, the highest monthly volume in the last two seasons, Interfax Ukraine news agency said on Tuesday.
Traders said rumours of potential feed wheat and maize imports in Northern Europe were weighing on prices.
GERMAN FEED WHEAT
Heavy demand for animal feed wheat once again meant Germany’s market retained its heavy price premium over Paris, with German feed wheat again quoted above bread wheat prices.
Standard milling wheat for April delivery in Hamburg was offered for sale down one euro at 232 euros a tonne, with buyers around 230 euros.
Feed wheat for nearby delivery in the South Oldenburg market near the Netherlands was again offered for sale way above milling wheat, unchanged at 239 euros a tonne with buyers offering around 237 euros.
“We continue to see high feed wheat demand and high feed wheat prices sucking in bread wheat to the animal feed mixture,” one German trader said. “The high feed demand is again showing no signs of slacking today and continues to support bread wheat prices.”
Heavy rain fell in much of Germany on Tuesday, again helping to reduce fears that wheat plants will suffer from recent dry weather. More isolated showers are forecast mainly in north Germany on Wednesday and Thursday.
Germany’s leading grain trading house Toepfer International said on Tuesday it expected the country’s 2012 wheat crop to fall to around 22.2 million tonnes from 22.7 million tonnes last year.
Standard new crop wheat for delivery in Hamburg in September was quoted way under old crop, offered for sale unchanged at 211 euros, with the welcome rain and lack of movement in Paris helping to stabilize prices.
The German Farm Cooperatives Association said on Wednesday it had cut its forecast for the 2012 wheat harvest to 21.5 million tonnes from 24.2 million estimated in March as damage from the cold winter and dryness becomes more apparent. This will be down on the weather-reduced crop of 22.7 million tonnes in 2011, they said.
“Generally the rain is helping, although more is needed in south Germany,” another trader said.
The EU rapeseed May futures contract was still supported by short covering as it expires on April 30. By 1535 GMT it was 1.00 euro higher at 506 euros a tonne, near its contract high of 508.50 euros.
“We are waiting for news that could quiet down the market. I don’t know where it could come from,” one trader said, pointing that Canada’s estimates for new record-large canola plantings had not been sufficient to do so.
($1 = 0.7619 euros) (Reporting by Valerie Parent, Sybille de La Hamaide, Michael Hogan in Hamburg; Editing by Jane Baird and Alison Birrane)
