EU wheat hits new lows as Algerian tender and euro weigh

PARIS/HAMBURG, April 16 - European wheat hit new contract lows on Wednesday after traders reported that French wheat had not been accepted in a tender by Algeria, confirming France's difficulties in selling to what was once its largest export market.

A new rise in the euro against the dollar also weighed on prices.

Benchmark May milling wheat BL2K5 on Paris-based Euronext settled 0.6% lower at 209 euros a metric ton, just above the contract low of 208.75 hit earlier.

The dollar resumed its descent on Wednesday, dropping across the board as a new bout of tariff-induced nerves gripped markets. The euro was up 0.8% against the U.S. currency.

Algeria’s state grains agency OAIC bought an estimated 570,000 metric tons of milling wheat in an international tender which closed on Wednesday, European traders said in initial assessments. Some estimates of volume bought were up to 600,000 tons.

Traders initially expected the wheat purchased to be largely sourced from the Black Sea region, especially Ukraine, Romania and Bulgaria. Purchases of French wheat were not initially reported.

"The fact that French wheat is absent is not good news," a trader said. "Add to that the low dollar making EU wheat even less competitive, the market can only go down."

Weakness on Euronext this week had brought French and other west EU wheat back into contention against the Black Sea, raising hopes that the region could win some of the business.

Russian 11.5% protein wheat was still around $242-$244 a ton FOB, with French and Romanian wheat around $2 cheaper, the trader said.

Algeria's OAIC has tacitly excluded undefined French wheat and companies in its purchase tenders in a move seemingly tied to ongoing tensions between Paris and Algiers.

Farm office FranceAgriMer cut its estimate of French wheat exports outside the EU on Wednesday, citing low demand from Algeria and China. Non-EU exports of the rain-hit crop would now be 70% lower than last season.

In Germany, welcome rain fell again in much of the country with more forecast in the coming week after exceptional dryness in March and early April. But key northern German grain regions received little precipitation.

“A positive impact of dry weather is that fields are not wet and are firm enough for tractors to drive on so a very early start has been made to corn sowings in Germany this spring," a German trader said. "This is positive for harvest prospects as the longer corn is in the earth the better the growth and yield prospects will be.”