EU wheat futures edge lower on Egypt import uncertainty

European wheat futures edged lower on Thursday in thin volumes as uncertainty over Egypt's import policy continued to hang over the market and a bearish supply outlook kept prices near contract lows. May milling wheat, the most active contract on the Paris-based Euronext exchange, was down 1.0 euro or 0.6 percent at 159.75 at 1650 GMT, just below the psychological threshold of 160.00 euros a tonne and not far from last week's contract low of 156.50 euros.

Front-month March was down 0.25 euro at 153.00 euros a tonne. Traders were awaiting major new developments from the world's largest wheat importer Egypt, with uncertainly about the outcome of the dispute about ergot fungus in Egypt still unresolved, one futures dealer said. Quality inspectors from Egypt's agriculture ministry have in past weeks rejected wheat imports containing ergot but the ministry said in a letter on Wednesday it would in future permit a trace level of the fungus. Traders were cautious about the letter sent by Egypt's Agriculture Ministry stating it would allow traces of ergot fungus in wheat imports. Some dealers said they had not seen the document and others that they wanted assurances this policy would be introduced into daily work by the agriculture ministry's quarantine authority, which has been at the centre of a row over ergot testing.

"Nothing has really changed in Egypt," a dealer said. "(Egyptian state purchasing agency) GASC is trying to reassure the market and at the same time another Canadian wheat cargo has been refused." In other news, French farm agency FranceAgriMer raised its forecast for total French soft wheat stocks at the end of the season to 6.0 million tonnes, the highest level in 17 years, as it cut its export outlook due to stalled trade with Egypt.