Wheat prices dip on euro rebound, rising stocks

February 24, 2012, London – Wheat prices in western
Europe were lower on Friday, weighed by a rising euro and
abundant global supplies with a rise in planted area expected to
add to already record stocks.

Feb. 24, 2012, London – Wheat prices in western
Europe were lower on Friday, weighed by a rising euro and
abundant global supplies with a rise in planted area expected to
add to already record stocks.

The most active May contract was down 1.75 euros,
or 0.8 per cent lower, at 202.00 euros a tonne by 12:58 GMT.

The euro rose against the yen, and extended a surge to
10-week highs against the dollar due to better-than-expected
German data on Thursday which led investors to close some bets
on losses for the single currency.

"European markets are suffering the rebound in the euro
currency, which is weighing their competitiveness on the
international stage," Agritel said in a market note.

Wheat markets were dampened on Thursday by a rise in the
U.S. Department of Agriculture's outlook for the all-wheat area
this year, as well as the prospect for record global stocks at
the end of the current season.

Firm export demand continued to underpin wheat prices,
with a pending tender by Algeria set to add to a spate of import
deals this month.

"Grain and oilseed prices are caught between improving
supply fundamentals and prospects for improving demand from
developing countries," Natixis analysts said in a note.

Feed wheat futures in London eased with May off
1.15 pounds at 165.25 pounds a tonne.

German wheat also followed Paris down, with standard
quality milling wheat for March delivery in Hamburg offered
for sale down one euro at 211 euros a tonne with buyers at
around 210 euros.

"The USDA planting forecasts seem to indicate a plentiful
world supply outlook which some consumers believe will mean a
further fall in prices in coming weeks," one German trader said.

"Farmers are willing sellers at such levels still over 200
euros a tonne but flour mills are still suffering from poor
(profit) margins on flour despite the fall in prices this week."

Warmer weather following the cold snap in early February
means German rivers and canals are now thawing out, helping
inland waterways shipping to return to normal. The river Danube
in south Germany reopened to shipping on Friday.

Demand from animal feed producers kept German feed wheat
prices close to milling wheat in parts of the country, a pattern
seen in past weeks.

Feed wheat for nearby delivery in the South Oldenburg
market near the Netherlands was offered for sale at 212 euros a
tonne, with buyers at around 210 euros.

The attractive prices meant milling wheat was again being
sold for animal feed. The unexpectedly low feed grain exports
this month from the Black Sea region have transferred buying
interest back to European feed wheat.

"The thawing out of German inland waterways will reduce
logistics problems and may cut short covering of wheat supplies
by feed makers in coming days," a trader said.

European rapeseed futures edged lower in line with U.S.
soybeans. The May contract was down 1.25 euros, or 0.27
per cent, at 457.00 euros, just off an 8.5-month high seen on
Thursday.

Operators expect narrowing crushing margins to curb
prices, even if rapeseed will remain supported by rallying crude
oil and worries about the next harvest.