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EU wheat rises as USDA report fuels supply concerns

European wheat futures rose on Friday as grain markets again drew support from closely watched U.S. government crop forecasts that underscored lower global wheat supply and included cuts to U.S. corn and soybean production.

December milling wheat on Paris-based Euronext settled up 1.25 euro, or 0.4 percent, at 204.75 euro ($237) a tonne.

It earlier equalled Thursday’s one-month high of 205.00 euros.

The U.S. Department of Agriculture’s (USDA) monthly supply-and-demand outlook, released near the end of Thursday’s European session, cut projected global wheat stocks in 2018/19, partly due to reduced production estimates for major exporters Russia and Australia.

Falling expectations for Argentina’s harvest, as crops face drought and frost, have also shifted attention back towards tightening supply in major exporting countries.

Wheat markets also continued to draw support from a cut to the USDA’s forecast of U.S. corn yields, which was seen as the biggest surprise in the report, dealers said.

Analyst firm Strategie Grains raised its monthly forecast of European Union soft wheat exports in 2018/19 by 600,000 tonnes to 19.4 million, citing improved competitiveness for French and German wheat as Russian prices rise after brisk recent exports.

On the French cash market, activity remained thin but traders also said export demand should pick up in the coming months due to rising Russian prices and a reduced global surplus.

Farming agency FranceAgriMer estimated that French farmers had sown 15 percent of the planned soft wheat area for next year’s harvest as of Oct. 8, up from 5 percent a week earlier.

Source: Reuters

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