OREANDA-NEWS. February 19, 2015. European wheat fell on Wednesday, pressured by a sharp fall in U.S. futures after Egypt cancelled a tender to purchase U.S. wheat, as well as by negative chart signals.

But the European Union market gave up less ground than U.S. prices as the setback for U.S. wheat in Egypt underlined EU wheat's greater competitiveness.

May wheat, now the benchmark contract on Paris's Euronext exchange, unofficially closed down 2.5 euros or 1.3 percent at 187.00 euros a tonne, still above chart support at 185 euros.

Paris prices had already fallen on Tuesday after a three-week high encouraged selling.

"The price fall is in the wake of yesterday's close, when the market wasn't able to hold the 190 euro level," a Euronext dealer said. "This is leading us towards the 185 euro support zone."

"At the same, time the European market is falling less than Chicago which was pressured by (Egypt's state grain buyer) GASC's refusal to pay the prices offered in the tender."

GASC cited the high prices offered in cancelling a tender to buy U.S. origin wheat on Wednesday.

"GASC will have to wait a long time to get U.S. wheat offered at the same price as European wheat," one export trader said.

European Union exports have been boosted this season by a slide in the euro, while a corresponding rise in the dollar has curbed U.S. export shipments.

The French farm agency FranceAgriMer on Wednesday lifted its forecast of France's 2014/15 soft wheat exports by 1 million tonnes to 9.8 million, citing strong feed-wheat demand in Asia.

An international wheat purchase tender issued by Algeria, whose deadline was on Wednesday, was expected to bring new sales for EU wheat.

German cash wheat premiums in Hamburg were little changed, with export optimism supporting prices but demand not strong enough to move premiums.

Standard wheat with 12 percent protein content for delivery in Hamburg in March was offered for sale at an unchanged premium of 6 euros over the Paris March contract. Buyers were offering 5 euros over.

"We are seeing steady demand for export and mills, but it is at routine levels and not enough to fire up the market," one German trader said. "Premiums remain range-bound, the market needs new impetus."

New crop premiums were about the same as old crop, with sellers for September delivery in Hamburg offering 6 to 7 euros over the Paris December contract.

"This relatively high level of new crop contracts is because of the uncertainty about the impact of the decision to launch two new wheat contracts in Paris this year in addition to the one trading now," a trader said. "This is causing doubt about which contract will have the liquidity."

Meanwhile, the decision by German biofuels producer CropEnergies to suspend production at its British bioethanol unit Ensus because of record low prices could free more British feed wheat for export, traders said.

At full production, the Ensus plant can consume over 1 million tonnes of feed wheat annually as raw material. This British wheat is now likely to be offered in export markets, traders said.