EU wheat prices rise to six-week high

European wheat prices rose to a 6-week high on Thursday, pulled by strong US futures, a low euro against the dollar and precaution buying on rising concerns about potential quality damage to the crops after heavy rainfall in the past days. September milling wheat on Paris-based Euronext unofficially closed at 167.25 euros a tonne, up 1.5 percent. It had hit 168.00 euros a tonne earlier, a price unseen since April 21.
Showers eased on Thursday after several days of torrential rains across France which led to the flooding of many towns and roads but also grain fields, notably in some of France's main grain belts. This brought concerns of a downgrade in wheat quality and significant damage from crop disease, and left cereals badly in need of a dry spell later this month.
"The rains in major producing regions in the centre and the north are pulling us away from the very good yields initially expected," a Euronext trader said. He noted that new crop protection treatments would be needed as soon as conditions permit. In Chicago, wheat rose on short covering and boosted by a surge in soyabean futures to their highest in nearly two years on hopes that export demand will rise amid concerns about the quality of the crop being harvested in Argentina.
Traders were also monitoring rain in US wheat belts and dry conditions in Canada that could hurt harvest prospects. In the Black Sea region, exports from Russia, Ukraine and Kazakhstan were seen falling 10.1 percent in the upcoming 2016/17 marketing year due to a smaller sowing area and dry autumn in Ukraine, a Reuters poll showed. The European Union granted export licences for 633,000 tonnes of soft wheat this week, taking the total since the beginning of the 2015/16 season last July to 28.9 million tonnes, down 3 percent below the same point last season.
The volume bought by Algeria in its tender for milling wheat for August shipment were still unclear but traders said French wheat offers had been limited by quality concerns after the recent bad weather. Maize prices were also firm due to a good competitiveness against its main competitors in the Black Sea region.