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EU wheat subdued as U.S. sowing surprise fades
January 13, 2017 / 4:28 PM / a year ago

EU wheat subdued as U.S. sowing surprise fades

PARIS, Jan 13 (Reuters) - European wheat futures were little changed on Friday as support from a lower than expected U.S. wheat sowing estimate a day earlier faded, while traders took a relaxed view of a cold spell forecast for Europe next week.

March milling wheat, the benchmark contract on the Paris-based Euronext exchange, was unchanged on the day at 169.75 euros a tonne by 1617 GMT.

Traders were monitoring weather forecasts calling for another severe cold spell in Europe next week.

A previous cold snap last weekend may have hurt wheat in eastern parts of the European Union, but healthy crop development and snow cover should limit risks, including in the upcoming freeze, analysts said.

“Weather worries are subsiding. There is a cold front coming but snow cover is adequate,” one futures dealer said.

The European market was adjusting to closing gains for U.S. wheat in Chicago on Thursday followed by a pullback on Friday.

In data released shortly before the close of trading in Europe on Thursday, the U.S. Department of Agriculture estimated that U.S. farmers sowed the smallest winter wheat area in more than a century, pegging the area below market consensus.

But price support was tempered by other USDA data putting quarterly U.S. wheat stocks at their highest level in 29 years, and world wheat stocks at a new record.

“The USDA reports have turned out to be a bit of a disappointment,” the futures dealer said.

“Even if the U.S. winter wheat area is at its lowest since 1909, you have to add the big carryover stocks so there is still going to be plenty of grain.”

Grain markets were also winding down ahead of a three-day closure in the United States due to Monday’s Martin Luther King Day holiday.

In Germany, cash market premiums were also little changed, underpinned again by optimism about exports.

Standard wheat with 12 percent protein content for January delivery in Hamburg was offered for sale unchanged at 4.5 euros over the Paris March contract. Buyers were seeking 4.0 euros over.

“Expectations are that a good lineup of ships to load wheat will develop in German ports in the second half of January, with some large vessels already starting to appear on the port loading lists,” one German trader said.

“Low water on the Rhine, Danube and other rivers continues to cause increases in transport costs, with cargo being transferred to road or loads spread around several vessels which can sharply raise the expense of fulfilling deals.” (Reporting by Gus Trompiz in Paris and Michael Hogan in Hamburg. Editing by Jane Merriman)

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