European wheat futures extended gains on Wednesday to hit their highest in around seven months, tracking a rally in Chicago. A huge purchase of over half a million tonnes of wheat by Egypt in a tender on Tuesday, including a first sale of French wheat this season, provided background support as the world's leading wheat buyer accelerated its import programme.
May milling wheat, the most active contract on the Paris-based Euronext exchange, unofficially closed up 3.0 euros or 1.7 percent at 177.00 euros a tonne. The contract earlier reached 177.25 euros, its highest since July 26, after breaking above chart resistance at 175 euros.
Egyptian state buyer GASC booked 535,000 tonnes of wheat in Tuesday's international tender, its biggest purchase since January 2014. "GASC's appetite for buying at this stage of the season is certainly striking," one trader said.
"At the same time, the sales of two cargoes of French wheat were more a case of circumstances, with the offers looking attractive to Egypt given the sharp rise in futures yesterday." Euronext continued to track gains in Chicago futures, where a rally was triggered on Tuesday by reports of changes being considered to US biofuel policy.
German cash market premiums in Hamburg were stable on hopes for new export business. Standard wheat with 12 percent protein content for March delivery in Hamburg was offered for sale at an unchanged premium of 4 euros over the Paris May contract; buyers were seeking 3.5 euros over.
"Premiums remain supported in the expectation that new export business will be generated for German wheat, with nearby hopes pinned on Saudi Arabia," one German trader said. "But the support is coming from hope rather than concrete signs of new sales."
Traders are hoping for an active programme of ship loadings in German ports in March. One ship is loading about 30,000 tonnes of wheat in Hamburg this week for Algeria. Elsewhere in Germany, two ships are loading 63,000 tonnes and 50,000 tonnes for Saudi Arabia, traders said.
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