Benchmark wheat futures on Euronext rose on Wednesday after hitting a contract low a day earlier, helped by weather concerns in the United States and a break in the euro's recent rally against the dollar. March milling wheat, the most active contract on Paris-based Euronext, settled 1.50 euros, or 1.0 percent, higher at 160.00 euros a tonne.
It earlier reached its highest since December 22 at 160.50 euros, as it pulled away from Tuesday's life-of-contract low of 158.25 euros. US wheat futures extended gains, led by a six-week high for Kansas hard red winter wheat, on concerns that severe cold could hurt US crops already struggling with dryness.
"The usual winter-kill stories are helping push prices into a positive start to 2018," one futures dealer said. "How this develops remains to be seen, but it at least starts 2018 with a market narrative of sorts." The risk of winter crop losses in the US Plains and Midwest has underscored the potential for a further decline in US wheat production this year and turned attention towards US government crop forecasts due on January 12, traders said.
Wheat prices were pressured last year by high global inventories and stiff export competition. Spot Euronext futures fell 5 percent in 2017, their fifth straight annual loss. Euronext prices also found relief in an easing in the euro after Tuesday's four-month high against the dollar near $1.21.
A stronger euro makes grain from western European countries more expensive overseas at a time when European Union exports are lagging well behind last year's pace. Rapeseed saw sharper gains on Euronext as the oilseed extended a rebound from contract lows last week, supported by strength in related markets.
February rapeseed ended 5.25 euros, or 1.5 percent, higher at 355.50 euros a tonne, just off an earlier two-week high of 356.00 euros. The contract was recovering from Friday's lifetime low of 346.00 euros. "There are pretty positive signals for the start of the year," an oilseed broker said. "You've got crude oil and vegetable oils rallying, and there's a weather market around the soybean crop in Argentina."
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