A surge on US grain markets pushed European milling wheat futures in to their highest in about 3-1/2 months on Friday. New crop benchmark December milling wheat on the Paris-based Euronext exchange unofficially closed up 1.5 percent or 2.75 euros at 177.50 euros ($198.55) a tonne. The contract earlier hit 177.75 euros, a high since March 2.
"The increase is mainly due to the strength in US markets," said Arnaud Saulais of Starsupply Commodity Brokers. US wheat futures in Chicago were up 2.4 percent in early Friday trade.
Chicago wheat had hit its highest since early May on Friday with the market on track for a second week of gains as dry weather in parts of North America threatens to damage crops.
Parched spring wheat in the northern United States remains the focus of crop concerns. "Euronext is mainly in following mode," a European futures trader said. "It's the US situation that is the centre of attention." However, the hot, dry spell in France is adding to a backdrop of global weather risks for wheat with countries from Australia to China seeing crop-punishing dryness, traders said. "The market is coming to life a bit and it's because of the lack of moisture in the US, here in Europe and a little bit all over the world," a French cash broker added.
The condition of this year's French wheat crop declined in the week to June 12 but 74 percent of soft wheat was still rated good or excellent, French farm office FranceAgriMer said on Friday. German cash milling wheat premiums in Hamburg were marked down as buyers declined to follow the strength in Paris, as expectations of a large German crop this summer raised prospects for good local supplies.
Standard wheat with 12 percent protein content for June delivery in Hamburg was offered for sale at 2 euros under the Paris December contract against 1 euro under on Thursday. Buyers were seeking 3 euros under Paris. "Recent market strength has been generated by fears about poor weather for US spring wheat but in Germany and also in Poland crops are developing well so prospects for good supplies in our local market are improving," one German trader said. "Rain in past weeks has been very beneficial to German crops and sunshine forecast in coming days will also be positive for growth."
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