Euronext wheat futures higher

Euronext wheat futures inched higher on Tuesday, steadying after a three-day pullback, as a steep fall in the euro and healthy international demand offset a drop in US prices. Traders were also looking ahead to acreage forecasts from the US Department of Agriculture (USDA) later this week, for further indications on an expected drop in US wheat sowings that could help alleviate a high global surplus.
May milling wheat, the most active contract on the Paris-based Euronext exchange, was up 0.75 euros, or 0.4 percent, at 173.75 euros a tonne by 1616 GMT. The contract rallied last week to a six-month high of 176.75 euros on Thursday before retreating. Tuesday saw US markets resume trading after a three-day holiday weekend, with Chicago wheat extending its pullback from multimonth highs last week under pressure from a rallying dollar.
But Euronext wheat drew support from a sharp fall in the euro, reflecting concerns about upcoming elections in Europe as well as the dollar's strength, fuelled by expectations of a US interest rate rise as soon as next month. A backdrop of brisk international demand, shown by a purchase by Jordan, a new tender launched by Tunisia and higher than expected weekly US export inspections, also supported prices.
"With the export activity and slightly more bullish sentiment, wheat is finally off the canvas," one futures dealer said. "There are potential shocks to the upside but it's too early to say." The euro's slide boosted export prospects in Germany, which is seen as well placed to capture overseas demand given a poor harvest last year in France. "The renewed weakness of the euro is very welcome as the euro has been stubbornly firm in past weeks," one German trader said.
"Demand is rather slack today but there are expectations a good line-up of ships to load wheat in German ports will develop in the final days of February and in March." A ship was loading about 60,000 tonnes of wheat for Saudi Arabia in Germany this week, the trader added. Export sentiment underpinned German cash market premiums.
Standard wheat with 12 percent protein content for March delivery in Hamburg was offered for sale unchanged at 3.5 euros over the Paris May contract; buyers were seeking 2.5 euros over. Broadly favourable crop conditions were keeping a lid on European prices, however, with widespread rain forecast this week expected to ease dryness in major grain belts in France, Germany and Poland.