August 19, 2019 / 5:24 PM / a month ago

Paris wheat drifts back to lows as supply pressures weigh

PARIS, Aug 19 (Reuters) - Euronext wheat futures fell on Monday in step with Chicago to trade around contract lows as hefty harvest supplies in the northern hemisphere weighed on prices.

Benchmark December milling wheat on Paris-based Euronext settled 2.50 euros, or 1.4%, lower at 171.00 euros ($189.72) a tonne, just above a life-of-contract low of 170.75 euros struck last Tuesday.

The less active front-month September futures slipped to a new contract low of 165.75 euros, below a previous low of 166.00 euros touched last Tuesday.

Chicago grain futures were also lower, pressured by favourable weather for U.S. corn and soybeans.

Euronext wheat was weakened early last week by a slide in Chicago corn after an unexpected increase to the U.S Department of Agriculture’s harvest outlook, which added to pressure from rising expectations for the European Union wheat harvest.

A drop in the euro against the dollar helped Euronext regain some ground at the end of the week, but supply sentiment remained negative in slow trading marked by many participants taking summer holidays.

“The ‘harvest pressure’ factor is strong at a time when French wheat needs to stay competitive for export against Black Sea origins,” consultancy Agritel said.

“A window of price support could come when the current harvest pressure is over and before the Argentine crop arrives on the market,” Agritel added.

Western European exporters like France and Germany typically face stiff competition from Black Sea suppliers like Russia at the start of the July-June export season.

Expectations for a bumper crop in Argentina, which harvests its wheat towards the end of the calendar year, could bring a fresh wave of competition in the second half of the season.

A rare shipment of French wheat for China was loading on Monday, according to shipping sources and port data.

Romanian wheat from this year’s harvest will not be able to meet a strict limit on bug damage in Algeria’s tenders, a trading house in southern Romania said, which could boost French prospects in its main overseas market.

On the French cash market, wheat premiums have been marked up in recent days, both to compensate for weakness in Paris futures and given reluctance of producers to sell at current levels, brokers said.

$1 = 0.9013 euros Reporting by Gus Trompiz in Paris Editing by David Holmes

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