European wheat prices fell to newcontract lows on Monday after a move by Egypt's state grainbuyer to reject a cargo of French wheat because it did notcomply with new import rules, raising concerns about futuresales to the world's top grain buyer. Front-month March on the Euronext milling wheatfutures market was down 2.25 euros at a contract low of161.50 euros a tonne by 1657 GMT. The 63,000-tonne French wheat cargo arrived in Egypt in December. It was initially rejected by agricultural quarantine for containing ergot, a common grains fungus, before being re-inspected. Traders said GASC's decision to apply zero tolerance towards ergot could lead to a risk premium and deter some exporters from bidding in its tenders. Traders had already turned out in lower numbers than usual at GASC's latest wheat tender last month. "Nobody will benefit from this story. Especially not Egypt, which, even if it is the world's largest buyer, is showing it is no longer a reliable buyer," a European trader said. "In this context exporters are again likely to be verycareful in Egypt's next tenders," French consultancy Agritelalso said. European wheat prices were also capped by expectationsRussia will not curb overseas sales by changing its grain exporttaxes despite proposals to curb exports to reduce rising animalfeed costs for Russian farmers. The drop in EU prices prompted the return of Algeria, amajor buyer of French wheat, which launched a tender for Apriland May shipment with the bidding deadline on Tuesday. "France must show a high export competitiveness, whichlimits any upward potential for the moment, in the absence of aweather problem on the 2016 crop," Agritel said. German cash premiums in Hamburg were stable followingreports Russia will not change its wheat export taxes, withGermany's own export pace increasing following a slow start tothe season. Standard wheat with 12 percent protein content for Februarydelivery was offered for sale unchanged at 3 euros under theParis March contract. Buyers were offering 4 euros under Paris. "Markets have an overall bearish mood with Russia apparentlynot going to restrict its wheat exports, Iran not likely to be abig wheat importer and Egypt's imports facing more disruptionfrom the ergot dispute," one German trader said. "Germany's exports are now becoming considerably largerafter the slow start and the port lineup of vessels loadingwheat in Germany in February looks large." But it now looked unlikely that Germany would be able tosell its export surplus, despite the expanding lineup of shipsin port, the trader said. "Germany is likely to have to carry over a large part of itsold crop as stocks into the next season and this is keeping themood bearish." http://english.ahram.org.eg/News/186497.aspx
