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EU wheat drops to new lows as large Russian harvest looms

Reuters, 23.08.17

HAMBURG, Aug 22 (Reuters) - European wheat futures in Paris fell to fresh contract lows on Tuesday on new signs of a bumper crop in Russia, but traders noted that low prices had prompted the return of some buyers to the market.

December milling wheat on the Paris-based Euronext exchange was down 0.4 percent, or 0.75 euro, at 159.25 euros ($187.33) a tonne at 1614 GMT, after touching a fresh contract low of 158.75 euros a tonne.

Paris prices continued to be pressured by signs of a big Russian wheat harvest which would generate intensive competition to EU wheat in global export markets.

IKAR, one of Russia's leading agriculture consultancies, on Tuesday increased its forecast for Russia's 2017 wheat crop to 79-82 million tonnes from a previously expected 77-80 million tonnes.

"We are still getting hurt by the 'Black Sea Blues', as prices over there continue to slip, dragging world futures down," a European trader said.

"However, there are some signs that the lower prices are starting to pick up a little export demand.

"Algeria on Tuesday launched a tender to buy milling wheat. U.S. wheat futures also touched contract lows on ample global supplies.

In Germany, rainy weather continued to hamper the wheat harvest, intensifying fears of quality damage to the crop and reduced German export supplies.

Germany's 2017 winter wheat harvests will fall 3 percent on the year to 23.4 million following persistent summer rain which caused late quality damage to crops, the association of German farmers said on Tuesday.

Between 40 to 50 percent of wheat in the north German export production regions is still waiting to be harvested, traders said.

"A larger than normal volume of the German harvest will only reach feed wheat standard and the poor quality of this year's crop will probably reduce German export supplies of good quality wheat," one German trader said.

"This and the expectations of large Russian exports after their large crop is weakening premiums today."

Standard bread wheat with 12 percent protein content was offered for sale at 3 euros over the Paris December contract for September delivery in Hamburg against 3.5 to 4 euros over on Monday.

Robust demand for feed wheat was keeping premiums high despite large feed wheat volumes expected from the new crop.

Feed wheat for prompt delivery in Germany's South Oldenburg feed wheat market was quoted at 6 euros over the Paris December contract.

($1 = 0.8501 euros)

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