European wheat rises on poor exports

European wheat prices rose further on Thursday, buoyed by a rally on US markets, though traders said sluggish exports this season will cast a shadow over prices. May milling wheat on Paris-based Euronext settled at 168.75 euros a tonne, up 0.3 percent, having hit a 3-1/2 month high of 169 euros earlier in the session. The most-active wheat contract on the Chicago Board of Trade was up 2.2 percent at $5.10 per bushel, rising for the sixth day in a row, lifted by forecasts of extended dry conditions in the US Plains.
The pace of European Union wheat exports is still lagging behind its target, running 20 percent behind last year, official data showed on Thursday. "In one month everyone will be looking at the new crop and the EU still has a 20 percent delay compared with last year's exports," one analyst said. In the cash markets buyers remained reluctant to keep up with the rise in the futures market and premiums continued to wane in both France and Germany. In Germany, cash premiums in Hamburg were cut after buyers declined to accept the overnight rise in Paris benchmark prices, with dealers hoping German wheat will survive bitterly cold weather this week without major damage.
Standard bread wheat with 12 percent protein content for March delivery was offered for sale 0.50 euros down at 2.50 euros over Paris May. "Outright prices were still up by about 2 euros despite the premium cut after Paris reached its highest level in about three months on Wednesday, which reduced demand today," one German trader said. "The big question is whether the deep frosts this week will damage German wheat, and the market seems to be taking a relaxed view of the possible danger."
Germany has experienced a sharp fall in temperatures since Sunday night, with frosts of minus 10-17 degrees Celsius around the country so far this week. "The frosts in Germany are certainly a threat because there is a lack of snow cover, especially in parts of east Germany," another German trader said.
"But there is a general hope that the strains of wheat planted in Germany are very tough and can survive about a week of such frosts, though a longer period will be problematic." Warmer temperatures are forecast for the weekend and into next week. Canals are starting to freeze, disrupting inland transport, the second trader added. This could be a problem if next week's forecast thaw fails to materialise, he said.