Euronext wheat futures edged higher on Thursday to set a six-week high in the wake of a weather-fuelled rally in US wheat but the European market was again capped by a sharp rebound in the euro and strong chart resistance. March milling wheat on Paris-based Euronext settled 0.25 higher at 170.00 euros a tonne.
It earlier rose to 170.25 euros, its highest since November 24. But this was only 0.25 euro above Wednesday's 5-1/2 week high and the benchmark contract again failed to break clear of a resistance zone at 169-170 euros. Chicago wheat, the global benchmark, rose to a near six-week high, supported by speculative buying and concerns about crop conditions in the United States.
"The market is continuing to factor in the deterioration in wheat crop ratings and weather conditions in the US With the start of investor rebalancing next week it's going to be funds setting the tone in the coming days," one futures dealer said. "On the European market the upward trend is being curbed by the retreat in the dollar and the fact that the 170 euro chart level is seen as an attractive selling point." Wheat is expected to be among commodities to attract buying as investment funds adjust to annual changes in the weighting of commodity indexes.
A pullback in the dollar since a 14-year high against a basket of currencies on Tuesday was lending support to US grains while acting as a brake on European prices. European Union wheat was expected to claim a sizeable part of a 475,000 tonne tender purchase by Algeria, as reported by traders on Thursday. But reaction was tempered by talk that Argentine wheat would be supplied at the lowest price cited in the tender.
"The Algerian purchase price looks rather low to be sourced in Germany," one German trader said. Germany has been tipped to claim more export sales this season after a poor harvest limited supplies in France and the euro's rebound was making traders cautious. "There is a lot of price checking of German wheat, especially by African buyers, but not much actual business so far," one German trader said. "There have been recent German shipments to South Africa and western Africa and if the euro can keep on its weaker trend we could see more."
Standard wheat with 12 percent protein content for January delivery in Hamburg was offered for sale unchanged on the day at 3.5 euros over the Paris March contract. Buyers were seeking 3 euros over. EU data showed that the bloc had exported 12.9 million tonnes of soft wheat by January 3, up 1 percent from a year ago.
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