European wheat futures hit two-week high

European wheat futures hit a two-week high on Friday as a falling euro and a big import deal by Algeria bolstered export sentiment. But price movements and volumes were limited on Friday as the market braced itself for long-awaited US government crop estimates at 1700 GMT. January milling wheat on the Paris-based Euronext market was up 0.75 euro or 0.4 percent at 205.50 euros ($280) a tonne by 1608 GMT.
It earlier touched a two-week high of 206.00 euros but stayed shy of a four-month peak of 206.50 euros struck last month, which was acting as a technical resistance level. Paris futures were extending gains from Thursday when a surprise rate cut by the European Central Bank sent the euro sliding, making grain from euro zone producers such as France cheaper for export.
The euro was weak again on Friday, close to Thursday's seven-week low against the dollar, as a downgrade by Standard & Poor's of France's credit rating fuelled negative sentiment towards the currency. Better-than-expected monthly job figures in the United States also lifted the dollar. Algeria, the top buyer of French wheat, bought around 650,000 tonnes in a tender this week, with most of the volume expected to come from France, traders said on Friday.
"It's a hefty volume, and it's important for us to have picked up this business," a French futures dealer said of the Algerian purchase. "But the market is not catching fire either. We are working around technical levels while waiting for the USDA report."
The focus for grain markets was on the US Department of Agriculture's November supply and demand estimates, which have grown in importance after the USDA cancelled its October report due to a government shutdown. Analysts expect the USDA to raise the 2013 US corn harvest estimate to a new record and to show a tripling of US ending stocks. Export sentiment also underpinned prices in Germany, with operators encouraged by weekly European Union export data on Thursday.
"Of the 461,000 tonnes of EU wheat export licences awarded this week, 206,000 tonnes were awarded to traders in Germany," one trader said. Traders receiving EU wheat licences can use them to export wheat from any EU country, but the awards suggest an underlying export trend in the country they are awarded to. German wheat premiums were little changed ahead of the USDA crop forecasts. Standard new crop milling wheat for January delivery in Hamburg was offered for sale at an unchanged premium of 5 euros a tonne over the Paris March wheat contract.