European wheat bounced to a one-week high on Thursday, boosted by a sharp fall of the euro against the dollar, making the grain more competitive on world markets. Reports of French wheat sales to Mexico in a move to replace US soft red winter wheat that has become expensive, Algeria's purchase of at least 250,000 tonnes of wheat and concerns of a new heatwave hitting France were also supportive, traders said.
December milling wheat, the new-crop benchmark on Euronext, unofficially closed 1.7 percent higher to 196.75 euros a tonne after hitting 199.50 euros earlier, a high since July 8. "The euro is at lows and heat at highs," a Euronext trader said, referring to a new heatwave hitting most of France. Although temperatures are expected to ease somewhat during the weekend another hot spell is expected early next week.
This could hurt wheat crops that remain to be harvested in the northern part of the country, traders said. But concern was more severe for maize (corn) crops which are at a crucial pollination stage, especially as irrigation was now limited in 30 departments in the country out of 96. Consultancy Strategie Grains lowered its outlook for this year's maize harvest in the European Union and warned it could make steeper cuts as dry and hot weather stresses crops in France and other major producing countries. The November maize benchmark was 2.5 percent up at 192.50 euros after hitting 193 euros, its highest since July 6.
The spread between European wheat and maize prices has been shrinking in the past two weeks. The wheat benchmark contract was less than 6 euros over the maize one on Euronext, from a usual spread between the two grains of around 20 euros. Some said maize could become more expensive than wheat if there was further damage to the crop.
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