Western European wheat prices were steady on Friday as the market consolidated below a near one-year high, with traders awaiting next developments in a standoff between Ukraine and Russia. Worries that tensions between the Black Sea grain exporters could disrupt shipments and spring sowing had fuelled a wave of buying on wheat markets, before resistance on price charts and widespread belief that the rally was overdone led to a price slide on Thursday.
Fresh gains in Chicago on Friday then helped Paris wheat steady and hold chart support around 210.75 euros. "People decided yesterday to sell thinking the rally was overdone," a futures dealer said. "Market fundamentals haven't changed but there is still the risk of an escalation in Ukraine, with the referendum in Crimea and military exercises." Investors are awaiting the outcome of a referendum on Sunday in Crimea, in which the southern Ukrainian region could vote to join Russia, which could prompt Western sanctions against Russia.
May milling wheat on the Paris-based Euronext market was up 0.50 euros or 0.2 percent at 212.00 euros a tonne at 1424 GMT as it consolidated below Thursday's near one-year high of 216 euros. Chicago wheat had also eased on Thursday after hitting a 4-1/2 month top but rose on Friday as uncertainty over Ukraine continued to draw buyers. The European market remained underpinned by healthy overall export demand, which have defied a recent run-up in the euro to a 2-1/2-year high against the dollar.
The European Union reported on Thursday 571,000 tonnes of weekly soft wheat export licences, keeping the bloc on course to post record full-year exports in 2013/14. Export demand helped keep German wheat premiums steady. Standard milling wheat for April delivery in Hamburg was offered for sale at an unchanged premium of 3 euros over the Paris May contract. Buyers were seeking 2 euros over.
"The weekly licence total was at a positively high level despite the stronger euro," one German trader said. "Exports remain the main market support. There is slack demand from German flour mills but also expectations the animal feed industry has a gap in its cover which could support the market in the next couple of months."
