European wheat prices edged higher on Thursday after news that Algeria had bought up to 375,000 tonnes of wheat, likely French, in its latest tender in another sign of good demand for EU wheat. On the Paris-based milling wheat futures market, January was up 0.2 percent at 276.50 euros a tonne by 1245 GMT. It earlier touched 277.00 euros, close to a contract high of 279.25 euros hit three weeks ago.
Algeria bought between 325,000 tonnes and 375,000 tonnes of optional-origin milling wheat for shipment in February, traders said. Poor quality for South American origins and a competitive price to Algeria meant that the French origin would likely be favoured, they said. The poor state of developing US wheat plants has raised further concern about global supply after a string of weather-reduced crops in major producing countries this year ranging from Russia and Ukraine to Australia and Britain.
Supply snags in major producing countries like Russia and Argentina have opened up export opportunities for European Union wheat, helping to drive Paris futures to their current levels. Traders noted that prices were rising despite the strength of the euro versus the dollar. Rabobank analysts forecast that Paris wheat could climb to 290 euros ($370) in the first quarter of 2013 and then pull back to 204 euros in the fourth quarter as grain output recovers from weather disasters and creates a global surplus. Weekly US and European Union export data later on Thursday will offer gauge of the extent to which the origins are sweeping up demand as competition slackens from other countries.
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