Euronext wheat extended gains on Thursday to its highest in almost seven months, as adverse crop conditions in several major production zones worldwide and weakness in the euro supported prices. December milling wheat, the new-crop benchmark and most active contract on Paris-based Euronext, unofficially closed up 0.75 euro, or 0.4 percent, at 178.50 euros, its highest since October 9.
This was slightly above a six-month top of 178.25 euros struck on Wednesday.
Euronext again drew support from poor yield prospects for drought-hit winter wheat belts in the United States, as well as concern about dryness in Australia and the Black Sea region. "The big topic is the US crop, that is going to be the driver for the new season," one trader said. This week's drop in the euro, which hit a near four-month low against the dollar on Wednesday, also remained supportive for Euronext, although the euro steadied on Thursday.
A weaker euro makes grain from countries like France and Germany cheaper for export. However, weekly European Union data showed soft wheat exports from the bloc remained well behind last season's pace. Cumulative 2017/18 exports stood at 16.6 million tonnes as of May 1, down 22 percent from a year ago.
In Germany, cash market premiums for higher protein grades in Hamburg rose after Saudi Arabia's state grains agency announced an international tender to purchase 540,000 tonnes of hard wheat closing on Friday. Premiums for 12.5 percent protein content wheat rose by 1 euro to 10 euros over Paris May for May/June delivery.
"The main disappointment is that the tender is relatively small in Saudi terms, there had been hopes even more could have been sought," a trader said. "But pretty hefty export supplies are said to be available in Germany and the Saudi tender is a very welcome opportunity to make some sales after a period of lacklustre exports." However, the Baltic States and France were also seen as in contention to claim part of the tender sale along with Germany, the trader added.
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