Wheat retreats as traders seek more clues on Russian exports

A French farmer harvests wheat during sunset, in Bourlon, northern France, July 19, 2018. REUTERS/Pascal Rossignol/File Photo
A French farmer harvests wheat during sunset, in Bourlon, northern France, July 19, 2018. REUTERS/Pascal Rossignol/File Photo

Euronext wheat fell on Monday, giving up most of its steep gains from the previous session, as traders awaited clearer signs as to whether top exporter Russia would restrict shipments this season.

Forecasts for some rain in drought-hit eastern Australia and slow European Union exports also cooled the market after Friday’s rally.

By 1605 GMT, benchmark December milling wheat on Paris-based Euronext, was down 3.00 euros, or 1.4 percent, at 211.75 euros ($242.18) a tonne.

“The fall is explained by the absence of bullish news,” one futures dealer said.

On Friday, the contract had climbed as much as 3 percent to 216.50 euros, approaching a 5-1/2 year high of 218.25 euros struck in early August, after a meeting between Russia’s agriculture ministry and grain traders fuelled speculation about possible export curbs.

Some traders reported that the agriculture ministry would consider curbing 2018/19 grain exports once they reach 30 million tonnes, as requested by meat-producing regions, but the ministry denied discussing any restrictions.

The news reinforced doubts over Russia’s capacity to meet the ministry’s forecast of 35 million tonnes of wheat exports in 2018/19, given an expected drop in production and very brisk shipments at the start of the season.

Traders are sensitive to any suggestion of export curbs in Russia after the country imposed a full ban back in 2010/11 following a severe drought, sending global prices surging.

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Russian traders said on Monday they might step up exports in the first half of the season to avoid potential limits later in the season.

Separately, the Interfax news agency quoted the agriculture ministry as saying that Russia plans to sell about 2 million tonnes of grain from state stockpiles in 2018/19, expanding an initial programme of 500,000 tonnes.

The speculation around Russian export policy added to a lull on the physical market in France.

“After the meeting in Russia on Friday, people started thinking back to 2010. So sellers are holding back a bit and are waiting to see what happens,” one French cash broker said.

Many market participants were returning from summer holidays, with activity expected to pick up gradually this week.

Weekly data from the European Commission showed that EU soft wheat exports in 2018/19 had reached 1.8 million tonnes by Aug. 19, down 40 percent from a year earlier.


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