PARIS - European wheat futures rose on Monday in step with broad gains in commodities as investors took heart from progress towards a European deal to tackle a debt crisis and an improved manufacturing indicator in China.
* European wheat remained in its recent range, with traders stressing a lack of fundamental support as Ukraine’s return as an approved supplier for Egypt’s state buyer underlined stiffening export competition.
* Moreover, uncertainty remained about the outcome of the European crisis talks, with equities giving up earlier gains, showing how grain markets were tied to fragile macro-economic confidence.
* Investors had initially warmed to progress made by European Union leaders on Sunday towards agreeing a new package to shore up the euro zone, even if final decisions were left to a follow-up summit on Wednesday.
* Markets also welcomed news that China’s manufacturing sector expanded moderately in October to snap three months of contraction, soothing fears of an abrupt slowdown in the world’s second-largest economy.
* January milling wheat on the Paris-based futures market was up 1.50 euros or 0.82 percent at 185.50 euros a tonne by 1155 GMT, also helped by an easing in the euro after an earlier rise took it to a six-week high versus the dollar.
* "It’s a macro-driven move rather than a move on grain market fundamentals. The China PMI coming out on the upside of expectations was a catalyst across markets for more risk on today," said Chris Gadd, analyst at Macquarie Bank.
* The decision by the state buyer in Egypt, the world’s top wheat importer, to re-admit Ukraine to its list of approved suppliers could increase competition for EU wheat in addition to heavy shipments from Russia.
* "They only need to sell one or two cargoes to Egypt to keep us under pressure," a French trader of Ukraine.
* Despite a heavy volume of shipments so far this season, Russian prices declined again last week as the country’s harvest campaign approached a close.
* Traders said competitively priced Russian wheat could pose a challenge to French wheat in Morocco, one of France’s major export outlets.
* Algeria, another key French customer, is holding a tender to buy 50,000 tonnes of feed barley, with the bidding deadline on Tuesday, traders said.
BRITAIN
* Feed wheat futures in London were slightly higher with November up 1.25 pounds or 0.85 percent at 149.00 pounds a tonne.
* Feed wheat’s unusual discount to corn continued to fuel expectations of increased switching by feed compounders.
* "We maintain a higher estimate for wheat feeding, we think the USDA are underestimating it from a U.S. and global perspective. Feed wheat into the major importing destinations is trading at a discount versus corn so there’s definitely an incentive," said Chris Gadd, analyst at Macquarie Bank.
GERMANY
* In Germany, prices were boosted by the rise in the Paris market but with physical trade often held back by uncertainty about the background economic picture coupled with lack of farmer selling in parts of the country.
* Standard new crop bread-quality wheat for January and later delivery in Hamburg was offered for sale up one euro at 193 euros a tonne with buyers around 191 euros.
* Traders also believe large numbers of German farmers were also believed to have made large sales of their wheat from the summer 2011 crop, traders said.
* "There is hardly any fundamental market news today and after quite a large volume of farmer selling in recent times the producers can sit and wait for future developments," one trader said.
* "The export outlook is not promising with the return of Ukrainian wheat to Egyptian tenders to provide more competition for EU wheat."
SPAIN
* Spanish physical wheat was marginally lower after lining up with recent falls on futures markets in Paris and Chicago, but had slowed recent falls due to uncertainty over the availability of French new crop maize as a competitor.
* Traders said the domestic maize harvest was well advanced, but doubts persisted over the availability of maize by road from its traditional supplier over the Pyrenees.
* "It’ll be as of the second week of November when French maize will face the acid test of logistics, and if it can overcome current transport and storage
problems, then sellers will be able to reinforce their positions, but they will be weakened if problems persist," said a report from the Mercolleida agricultural exchange.
* Imported feed wheat for prompt and November-December delivery was quoted at 195-197 euros/tonne in Spain’s main grains port Tarragona, down 2-3 euros from last Thursday.
* Dealers noted the spread between November feed wheat and maize was unusually narrow at 2 euros, suggesting wheat had downside potential.
* Prices as of
1155 GMT
Product Last Change Pct Move End 2010
Ytd Pct
Paris wheat 188.75 1.00 +0.53 252.20
-25.16
London wheat 149.00 1.25 +0.85 199.00
-25.13
Paris maize 188.00 1.00 +0.53 235.00
-20.00
Paris rapeseed 440.00 6.00 +1.38 497.25
-11.51
CBOT wheat 643.25 11.25 +1.78 794.25
-19.01
CBOT corn 659.50 10.25 +1.58 629.00
4.85
CBOT soybeans 1226.75 14.50 +1.20 1393.75
-11.98
CBOT rice 16.87 0.46 +2.73 14.00
20.51
Crude oil 87.95 0.55 +0.63 91.38
-3.75
Euro/dlr 1.39 0.00 -0.27 1.34
3.58
*Front month contracts. CBOT contracts in cents per bushel except rice which is in dollars per hundredweight. Paris wheat in euros a tonne and London wheat in pounds per tonne.
