EU wheat prices rise as rains raise quality concerns

[SASKFARMER3]

Wheat prices in western Europe were higher on Thursday with attention focussed on the extent of rain damage to crops in France and Germany.

* Dealers noted worries over rain damage to the French crop led to some buyers to turn to Euronext for milling quality.

* "There is a bit of panic about quality," one futures dealer said. "This is encouraging some people to come and buy on Euronext in case the crop quality isn't there."

* November milling wheat on the Paris-based Euronext market was unofficially closed up 1.50 euros or 0.8 percent at 181.00 euros a tonne, after earlier reaching its highest in almost a week at 182.75 euros.

* Some very poor quality readings so far in northeast France have raised the risk that a large portion of the crop would be downgraded to animal-feed quality.

* Traders said low crop quality could eventually drag Euronext prices lower as the futures represent a basic milling wheat standard.

* On the French cash market, premiums continued to widen between milling and feed wheat.

* At Rouen, France's top grain export hub, feed wheat for July/August was quoted at 33 euros below Euronext November , broker said. Milling crop was at 6 euros above Euronext November but prices were nominal with sellers reluctant to offer crop given signs of poor harvest quality.

* Uncertainty about grain quality could also be created by differing requirements set by the Rouen silos that take wheat delivered against Euronext's new-crop futures

No problem Canada has lots of last years #1 hrs available that Grain companies will get.

[SASKFARMER3]

Europe is heading toward a large wheat harvest this year but concerns are mounting that much of it could only be fit to feed animals after heavy rain earlier this month.

Damage levels are unclear for now with farmers and analysts still assessing the state of crops as harvesting resumes in many countries, but there is little doubt there be will less wheat meeting milling standards than initially thought.

"In light of the good yields expected we can still hope to see a good milling wheat output but we are certainly heading toward a lower quality than average," Benoit Fayaud from analysts Strategie Grains said, adding it was too early to have a clear picture of the European crop's quality.

The quality issue mainly concerned western Europe, Romania and Bulgaria, he said.

The consultancy last week again raised its monthly estimate for soft wheat production in the European Union to 140.5 million tonnes, now 4 percent above last year's crop.

In France, the EU's largest wheat producer and exporter, operators said only 30 percent of the crop had been cut as of Wednesday after rain over the weekend delayed harvesting.

Field work was resuming around Paris and in eastern France with initial results showing some damage, mainly in the measurement of milling quality, known as Hagberg numbers.

Average Hagberg could fall as low as 140-160 seconds in France this year, against 99 percent of the crop meeting the key level of 220 seconds in 2013, traders said.

"What was still good milling wheat 15 days ago has just become feed wheat," a broker in eastern France said.

Premiums for higher-quality wheat have soared in French ports on fears that this year's harvest would be spoiled by poor quality.

In an opposite move, feed wheat has been sold at a discount as traders anticipate hefty supplies of low-quality wheat.

But some French traders were more cautious.

"We must wait. A maximum 30 percent of the crops have been harvested and on the Atlantic coast, results are good. For the north, we'll know more next week when the harvest will be more widespread," one trader said.


PICTURE STILL UNCLEAR

In Germany, the EU's second largest wheat producer, rain fell just as harvesting started, raising concerns of some loss of quality and that some of the crop had been flattened.

"However, the picture is still unclear and we do not know if damage has been suffered nor the possible extent," an analyst said. "Weather in the north and north east of the country has been much better and I do not think there will be any quality problems in north Germany."

About 15 percent of Germany's crop has been harvested. Forecasts are for showers in much of Germany including the north between Friday and Monday.

Germany's farm cooperatives association on July 7 pegged the 2014 wheat crop of all types would rise 1.8 percent on the year to 25.46 million tonnes.

In Britain, the wheat harvest has barely begun but the outlook is generally favorable with production expected to rebound after two consecutive poor crops.

"We've only really heard of one or two crops which have been harvested and we are not even at one percent at this stage," said analyst Susan Twining of crop consultants ADAS.

The International Grains Council has forecast a UK wheat crop of 15.5 million tonnes, up 30 percent from last season.

[SASKFARMER3]

If we have a frost this will kill prices for feed wheat I mean can you say getting paid like oats.

[boarderbloke]

Those damaging rains thoughout France may give green peas a bump too. With the higher number of acres planted in Canada, it would be great to see strong demand from Europe, as they have the money to pay up for good quality.

[SASKFARMER3]

In sask only saw one crop that's awesome on 300 acres in the valley south of Cupar!

[SASKFARMER3]

Pea crop! Is what I meant