European wheat prices rose on Monday as dealers covered short positions after reports Russia is considering increasing its grain export restrictions. Front month March wheat on the Paris-based Euronext exchange unofficially closed up 3.0 euros or 1.8 percent at 167.25 euros a tonne, the day's high. Russia's Agriculture Ministry is considering toughening grain export limits and imposing tougher restrictions until new crops arrive for sale this summer, the Interfax news agency reported on Monday.
The aim is to cool Russian internal market prices. Reuters could not confirm the report. Russia already has an export tax on wheat but despite the duty, the country's grain exports hit a record in December due to the weaker rouble. The picture in Russia remained blurred, leading to a risk-off mood among market participants. But the report about possible additional restrictions on Russian exports prompted some dealers to cover short positions, traders said. "Export restrictions by Russia, which dominates the export market, would change the story but it has yet to be confirmed," a trader said.
Russia is a major rival to France in wheat export markets. The downward trend in Paris wheat prices since early November meant some export competitiveness had been regained but international demand is still weak, another trader said. German cash premiums in Hamburg were cut to compensate for the strength in Paris, with buyers declining to accept price rises.
Standard wheat with 12 percent protein content for February delivery was offered for sale at 2.5 euros under the Paris March contract against 3.5 euros under on Friday. Buyers were offering 3 euros under Paris. In Poland, prices were little changed in the past week with farmer selling generally sluggish after recent price falls. "There was a bit more activity on the export side with one large vessel loading in Poland for East Africa and a vessel in Szczecin loading 25,000 tonnes for Cuba," one Polish trader said.
Export milling wheat with 12.5 percent protein content was little changed on the week at between 695-700 zlotys (155.4-156.5 euros) a tonne for February delivery to port silos. Domestic prices for milling wheat with 12.5 percent protein were unchanged at 650-680 zlotys a tonne for February delivery to mills depending on the region. "The domestic market was not very active," a Polish trader said. "Mills seem to have good supply cover. The weather is favourable, snow covers almost whole country and temperatures are mild so there are good conditions for grains."
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