European wheat prices rose on Friday, supported by concerns about escalating tensions in Ukraine and heavy rainfall in the northern US Plains spring wheat belt. However, the rise was smaller than on US markets as European prices remained pressured by the poor quality of the harvest in some parts of Western Europe, mainly France, the EU's top grower and exporter of wheat. By 1500 GMT, front-month November wheat on the Paris-based Euronext market was 1.50 euros or 0.9 percent higher at 173.00 euros a tonne.
By the same time, Chicago benchmark December wheat had gained more than 2 percent to $5.67-1/2 a bushel. This brought the contract's gains over the past seven sessions to 4 percent. Russia's decision to send a convoy of aid trucks across the border into eastern Ukraine without Kiev's consent increased fears that the conflict would worsen before next week's meeting between Vladimir Putin and Ukraine President Petro Poroshenko.
"We are following Chicago which is rising due to the tensions in Ukraine and, in the background, concerns about vomitoxin," a trader said. Freshly harvested wheat in North Dakota and Canada have been testing high for vomitoxin at a time when US exporters are already struggling with high levels from the southern Midwestern SRW harvest. The fungal residue can make a crop unfit for use. In France, the harvest is virtually over according to FranceAgriMer, which said 97 percent had been cut by Monday.
News that France had been forced to import Lithuanian and UK wheat to cover previous export sales were keeping a lid on prices, traders said. "There has been some (imports) and there will be more. It's an illustration of the poor quality of this year's crop and a sign that the season will be tough," one said. German cash wheat premiums in Hamburg were little changed as the final results from Germany's rain-delayed wheat harvest were awaited.
Standard new crop wheat with 12 percent protein content for delivery in Hamburg from September was offered for sale at an unchanged premium of 8 euros over the Paris November contract . Buyers were offering 7 euros over Paris. "The harvest in Germany is still being delayed by rain. Quality results so far are reasonable although they do vary according to region," one German trader said. "I think rain will cause a 1 to 1.5 percent fall in protein levels nationally against 0.5 percent spoken of in the market. But (the milling quality criteria) Hagberg falling numbers seem satisfactory according to the latest figures I have seen today."
About a third of Germany's wheat area is still to be harvested because of the rain, German farming association DBV said on Tuesday. "I think 30 percent is too pessimistic and that only 10 to 15 percent will be left if the weekend is dry," another trader said. "Overall I think the market is getting support from export optimism partly because France's quality problems with this year's harvest are likely to transfer more demand to Germany for shipments to Algeria, France's biggest export customer." He also said there was talk a bulk carrier would arrive in Rostock in the next week to load wheat for Iran.
Traders said they also expected a tender from Egypt's state buyer GASC to be issued for September 21-30 shipment in coming days if Chicago prices dip.
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