Euronext wheat eases as euro bounce, French supply outlook weigh

PARIS, July 16 (Reuters) - European wheat futures edged down on Wednesday as support from a large import purchase by Algeria faded in the face of a rising euro and a projected jump in French wheat stocks.

September wheat BL2U5 on Euronext was down 0.4% at 199.50 euros ($231.92) a metric ton by 1559 GMT.

The contract had rallied on Tuesday, with weakness in the euro and news of a large purchase by Algeria boosting export sentiment.

But the euro rebounded sharply on Wednesday from a three-week low against the dollar, amid reports that U.S. Donald Trump could soon fire the head of the Federal Reserve. FRX/ Trump later said he was not planning to fire Fed Chair Jerome Powell.

Export sentiment was also cooled by expectations that Black Sea origins will supply most of the Algerian demand.

“The big purchase in the Algerian tender on Tuesday of over 1 million tons is failing to inspire our market, as it looks like it is being sourced almost totally from the Black Sea region,” one German trader said.

“I do not think the west EU has a serious chance of being supplied.”

The export challenge for Western European wheat was underlined by a French supply-and-demand outlook.

In its first projections for 2025/26, farm office FranceAgriMer on Wednesday forecast that soft wheat stocks will swell to a 21-year high at the end of the season as a rebound in production outweighs an expected doubling in exports outside the European Union.

"The French supply balance is showing a really big surplus and that looks like being the case in other European countries," a futures dealer said. "This is clearly one of the factors weighing on Matif (Euronext)."

Euronext found some support from a rise in Chicago wheat Wv1, which was boosted by the dollar's slide. GRA/

Large short positions held by investment funds also limited downside in Euronext prices, according to dealers.

Financial investors reduced their net short position in Euronext wheat last week but retained a heavy short weighting, data published by Euronext showed.

Rain and cooler temperatures were slowing wheat harvesting in France and Germany after a quick start. Good yields are anticipated though there was caution about milling quality.

“It is still unclear what the protein content will be of Germany’s wheat crop, which is also making exporters unwilling to make advanced sales from Germany’s new crop even if they find demand,” the trader said.

($1 = 0.8602 euro)