European wheat prices rose to a new two-month high on Monday in the wake of a rally on US markets and support from strong demand for German wheat. December milling wheat on Paris-based Euronext unofficially closed up 0.9 percent at 166 euros a tonne after touching 166.25 euros, the highest since Aug. 25.
CME Group's December EU wheat contract was 1.3 percent higher at 181.50 euros a tonne.
"The weak euro in recent weeks is playing its part in this by boosting the international competitiveness of European wheat," Commerzbank said in a note. "After a poor French crop, however, much less wheat will be coming from there this year, whereas Germany can export more."
The December wheat contract has gained 2.5 percent during the past week on Euronext and is up 5.5 percent on CME over the same period.
"The question is how long the market can hold this bullish trend," one trader said.
Strong demand for German wheat benefited CME's inland-based delivery contract as opposed to Euronext's port-based delivery which relies more on French exports, traders said.
In Chicago, CBOT wheat futures climbed nearly 2 percent on Monday as traders covered short positions following US regulatory data last week that showed an unexpectedly large build in bearish wheat bets.
German cash market premiums in Hamburg were little changed, still underpinned by export optimism after the euro's weaker trend in past weeks.
Standard wheat with 12 percent protein content for November delivery in Hamburg was offered for sale unchanged at 4.5 euros over the Paris December contract. Buyers were seeking 3.5 euros over.
"Overall the market remains supported by hopes the euro's weakness will enable additional export sales," one German trader said. "But there is a risk-off mood today with much of Europe having a public holiday on Tuesday, including about half of Germany."
"Low water levels on the Rhine and Danube are still making logistics irritatingly expensive in some regions."
Comments
Comments are closed.