August 14, 2019 / 5:17 PM / in a year

EU wheat steadies above contract lows ahead of holiday

PARIS, Aug 14 (Reuters) - Euronext wheat inched higher on Wednesday, steadying ahead of a long weekend in parts of Europe after hitting contract lows the previous day on a surprisingly large U.S. corn crop forecast.

Benchmark December milling wheat on the Paris-based Euronext exchange settled 0.50 euro, or 0.3%, higher at 171.75 euros ($191.28) a tonne.

On Tuesday, it fell to a life-of-contract low at 170.75 euros as a plunge in Chicago corn futures after higher than expected U.S. government estimates of corn acreage and yields spilled over into wheat markets.

The U.S. Department of Agriculture’s (USDA) surprising data encouraged many European market participants to stay on the sidelines before Thursday’s public holiday in France and elsewhere.

“With the holiday period plus the USDA report, everyone is sitting tight for now,” one grain broker said.

Many traders are taking a long weekend after Thursday’s public holiday, adding to a mid-summer lull on the market.

Euronext futures will trade normally on Thursday and Friday.

Weekly Euronext data showed financial investors expanded their net short position in the exchange’s wheat futures and options last week.

France exported 9.7 million tonnes of soft wheat outside the European Union in the 2018/19 season that ended on June 30, up nearly 20% from the previous season, customs data compiled by Refinitiv showed.

In Germany, standard bread wheat with 12% protein for September onwards delivery in Hamburg was offered for sale at 1.0 euro under Paris December against 1.75 euros under on Tuesday as sellers resisted this week’s sharp fall in Paris.

Buyers were seeking at least 2 euros under.

Germany’s 2019 wheat harvest will be 17.5% higher than last year at 23.81 million tonnes, despite an early summer heatwave which stressed some crops, Germany’s association of farm cooperatives said on Wednesday.

The estimate suggested Germany will like France achieve a good crop despite record-breaking heat followed by wet weather at the end of harvesting.

“With over 90% of Germany’s wheat harvested, the report showed that the heatwave in late July and early August caused only marginal damage to wheat and enabled very rapid harvest progress,” one German trader said.

Traders said wheat has been able to dry out quickly in the final northern areas still to be harvested as local showers rather than prolonged rain have fallen. Lower temperatures have also reduced the danger of fungal development.

“I was in Malente in Schleswig-Holstein, one of the last areas to be cut, and harvesters were rolling,” the trader said. “Naturally if rain continues there could be quality loss but milling quality rather than feed wheat is still expected.”

$1 = 0.8979 euros Reporting by Gus Trompiz in Paris and Michael Hogan in Hamburg Editing by Susan Fenton

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