EU wheat bounces from two-week lows on weak euro

European wheat futures rebounded on Tuesday from a near two-week low, supported by a bounce in US futures, a fall in the euro and weather risks for European wheat crops. December milling wheat, the most active contract on the Paris-based Euronext exchange, was up 3.50 euros or 1.9 percent, at 186.00 euros ($217.10) a tonne at 1531 GMT.
The contract had fallen on Monday to its lowest since May 23 at 182.50 euros but held a chart support zone at 182-183 euros. Prices were underpinned by uncertainty over crop weather, with concern about storms and heavy rain in France adding to worries about dryness in northern and eastern Europe. "Despite the upturn on Euronext, sellers are very cautious," a French broker said. "The stormy weather in France in the past 10 days is very suited to parasite pressure and particularly fusarium (fungal) disease. With this sort of weather, the sellers are on alert about crop quality."
A series of storms in France has caused flooding and damaged some fields, notably vineyards in the Bordeaux and Cognac regions in the southwest. However, traders said prices were being capped by Black Sea competition, with Russian wheat remaining cheaper for new-crop exports despite the prospect of a smaller harvest in Russia this year. In Germany, cash market premiums in Hamburg were little changed with dryness in the north causing concern.
Standard bread wheat with 12 percent protein content for June delivery in Hamburg was offered for sale unchanged at 8 euros under Paris December. "There was rain in much of Germany in past days but little fell in the driest regions in the north and east where there is worry about the lack of moisture stressing crops," one German trader said. "So the rain has not changed the picture and the outlook in the coming two weeks remains dry." "Because of the uncertain crop picture, north German farmers are unwilling sellers. But the crop picture in south and central Germany is much better with wheat generally receiving sufficient rain." Export prospects are also brightening with the weaker trend in the euro.