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The European wheat market fell Wednesday, as the rain forecasts for Black Sea crops increased the prospect of export competition. Dealers were also awaiting planned U.S. China trade talks scheduled this weekend. U.S. Wheat Futures in Chicago fell as well, further reducing Euronext’s prices. Many market participants were absent due to a public holiday in France.
One German trader stated that “recent bearish momentum continues in Euronext, with a bad west EU export outlook but with limited actions today due to the French holiday.” The weather for most EU crops and the Black Sea is good, except in the north of EU and UK.
At 1453 GMT, the benchmark September milling wheat BL2U5 traded on Paris’ Euronext dropped 0.7% to $228.97 per metric ton.
The import demand was also low, as no important wheat tenders were announced.
Another trader stated that “good volumes of rain will be forecast for South Russia and other Black Sea Regions in the coming days, including the Balkans and Ukraine,” This will ease concerns about the Black Sea crop’s dryness and help to put it on a path for large export supplies. Soon, we could see an increase in crop forecasts for Russia as well as the Balkans.
It appears that the Black Sea region will again dominate exports into the Middle East, Africa and Asia in the second half this year. This raises the question of whether Euronext will be able to maintain the 200 euro per ton mark, which is important psychologically for many on the market.
The first U.S. – China trade talks, which took place in Switzerland on Saturday, could help to cool the trade war that has disrupted the grain markets.
On Thursday, the United States and Britain announced an agreement to reduce some tariffs. This deal raised hopes that a de-escalation in trade disputes would prevent disruptions to the grain markets. (Reporting and editing by Richard Chang; Michael Hogan)
(source: Reuters)
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