EU wheat pauses after USDA rally, more gains seen

* European milling wheat futures retreat slightly in midday
deals on Thursday, handing back some gains from the previous
session after a bullish U.S. Department of Agriculture report.

 * Dollar's strength against the euro weighed on Chicago
overnight, but traders said fundamentals remained supportive,
dealers said. [GRA/]

 * "We are still digesting yesterday's USDA report," a trader
in Paris said. "Buyers are waiting on the sidelines"

 * The USDA slashed forecasts on Wednesday for global wheat
ending stocks and U.S. corn stockpiles, which reinforced supply
worries. [ID:nN09204933]

 * "The market is consolidating," another trader said. "The
trend remains bullish. What we need to look at is where we'll
stand at the end of the day, when Chicago opens."

 * Paris March milling wheat BL2H1, Europe's benchmark, was
down 0.54 percent or 1.5 euros to 277.00 euros ($379) a tonne by
1221 GMT. The contract reached a new high of 281 euros on
Wednesday.

 * Paris' November contract BL2X1 was likewise down 2.25
euros, or 0.92 percent, at 243.50 euros a tonne.

 * Traders said French milling wheat was still competitive
with U.S. hard red winter wheat, a quality that is still in
demand from north African and Middle Eastern importers.

 * But others noted that premiums in ports on the cash market
were going down, suggesting diminishing needs from exporters.

 * Customs data showed France exported 1.4 million tonnes of
soft wheat in December, raising total exports in the first half
of the 2010/11 season by 32 percent year-on-year to 10.1 million
tonnes. [ID:nLDE71910J] 

 * Euronext rapeseed futures <0#COM:> in Paris also in the
red, with the May contract COMK1 off 0.05 percent at 476.50
euros a tonne.

 SPAIN

 * Spanish wheat prices pause after months-long rally due to
weak demand from indebted livestock farmers in the major
grain-importing country.
 * Traders say demand in seasonal lull due to reproductive
cycle, but also due to a drop in meat exports.

 * Prompt feed wheat in top grains port Tarragona offered at
251 euros/tonne, down 1 euro from a week ago GRAES01.

 * Resales reported for feed wheat at 245 euros in Tarragona,
replacement quoted at 260 euros.

 * "Everything is below replacement, stocks are falling.
Sooner or later they'll have to replace, and prices can only go
up," a trader said.

 * "I would say prices are high enough, but the market is
heartless. At this rate there'll be just a handful of livestock
farmers left in Spain, and we'll import meat."

 * Traders said stocks of domestic old crop wheat were also
drying up, which would make Spain more dependent on imports in
the coming months and could add further upside to prices.

 GERMANY

 * Germany's market was weaker, following the drop in Paris
but with prices still well supported by expectations of
increasingly tight global grain supplies as described by the
USDA report on Wednesday.

 * Standard bread-quality wheat for February delivery in
Hamburg was offered for sale down one euro at 274 euros a tonne,
with buyers at around 272 euros.

 * "We have another USDA report on Wednesday this time about
export sales which could also cause some fireworks," one trader
said. [ID:nN17540A] "The market seemed to be taking a pause
today but it is remaining well supported around recent highs."

 * Market talk was also growing that major importer Algeria
was about to make a purchase after negotiating for much of the
week in a tender for a nominal 50,000 tonnes of wheat.
[ID:nLDE71614C]

 * Bids were submitted in Germany to buy 163,944 tonnes of
barley in the latest round of sales from European Union
intervention stocks. Some 196,936 tonnes of intervention barley
is still unsold in Germany. [ID:nLDE7190MP]

 * "This bidding level shows hefty demand for intervention
feed barley," one trader said. "There is market talk that a
sizeable volume of the EU sales made in Germany has been sent
elsewhere in the EU, including big shipments to Spain."

 * The roster in Spain's second-largest grains port Cartagena
shows a cargo of 29,000 tonnes of barley shipped from Rotterdam,
as feed makers seek cheaper alternatives to wheat.

 * Prices at 1229 GMT
 Product             Last    Change   Pct Move End 2010 Ytd Pct
 Paris wheat         277.00    -1.50    -0.54   252.50     9.70
 London wheat        211.00    -1.75    -0.82   199.00     6.03
 Paris maize         240.00    -1.25    -0.52   235.00     2.13
 Paris rape          476.50    -0.25    -0.05   497.25    -4.17
 CBOT wheat          876.50    -9.50    -1.07   794.25    10.36
 CBOT corn           695.00    -3.00    -0.43   629.00    10.49
 CBOT soybeans      1448.50    -2.50    -0.17  1393.75     3.93
 Crude oil            86.42    -0.29    -0.33    91.38    -5.43
 Euro/dlr              1.36     0.03    +2.07     1.34     1.88
 * Paris futures prices in euros per tonne, London wheat in
pounds per tonne and CBOT in cents per bushel.
 (Reporting by Martin Roberts in Madrid, Michael Hogan in
Hamburg, and Marie Maitre and Valerie Parent in Paris)

(Source: http://af.reuters.com/article/commoditiesNews/idAFLDE71918X20110210)