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EU Wheat remains subdued due to abundant supply

Euronext wheat traded again in a tight range on Wednesday. A falling euro was not enough to support the futures, and they remained near their contract lows.

The most active position in December milling grain on Paris' Euronext was down 0.1% to 187.50 euro ($218.12) per metric ton at 1435 GMT. This is close to the contract low from last Wednesday of 185.00 euro.

The euro has fallen for the third consecutive day due to political uncertainty in France after the fall of its last government.

Euronext also received some help from a stabilization in Chicago wheat prices after they had reached a low of five years.

The traders said that a partial shutdown of the United States government was contributing to a subdued grain trading by disrupting U.S. export and crop data and raising doubts about the timing of the aid promised for U.S. Farmers affected by the trade dispute with China.

The rising supply of wheat in exporting nations has remained a constraint on the price, and harvests in the southern hemisphere are set to increase competition.

Donatas J. Jankaukas of CM Navigator said that "supplies are abundant for the moment, and new volumes should be arriving soon from Australia or Argentina."

The traders in Europe were waiting to see if recent falls on Euronext or for the Euro would bring new demand.

A German trader reported that the price of Russian wheat with 11.5% protein for November shipment was about $226 to $228 per ton FOB on Wednesday, or about $3 higher than French wheat. This depends on Euronext, and currency movements.

The price of Argentine wheat, however, was just below the $220 mark, despite higher shipping costs for buyers in North Africa and Middle East.

Estimates for Russian exports increased in September and Octember, suggesting that the world's biggest wheat supplier was recovering from a slow start to the growing season.

Slow sales by farmers also plagued exporters of European Union Wheat.

The problem is that farmers in Germany and other EU countries are not selling because they're unhappy with the Euronext price. The trader explained that it was difficult to obtain enough supplies to satisfy the current requests from buyers in North Africa, West Africa and other parts of Africa. Reporting by Gus Trompiz and Michael Hogan, Hamburg. Editing by Tasim Zaid.

(source: Reuters)