European wheat prices rose on Thursday with crop prospects in Germany, Britain and several other countries dented by a prolonged dry spell, while the weakness of the euro boosted the outlook for exports. December milling wheat, the most active contract on Paris-based Euronext, ended up 1.50 euros or 0.8 percent at 189.25 euros a tonne after peaking at 189.50 euros, the highest since July 6 and close to its resistance of 190.00 euros.
"The market continues to price uncertainties," a trader said. Wheat prices were also supported by strong US markets, traders said. Harvesting was advancing at a fast pace in France but some storms were forecast for Friday and Saturday. The market is expecting a good quality crop at around 35 million-36 million tonnes this year, down between 5 and 10 percent from last year.
That is well above the 33.2 million tonnes forecast issued by consultancy Strategie Grains at the end of June. "If France does harvest between 35 and 36 million tonnes the market will have to fall to grab market shares," a trader said. Physical wheat premiums in Rouen, France's main grain export terminal remained strong, with traders citing difficulties for exporters in securing supplies for planned shipments to Algeria amid a lack of sellers.
In Germany, cash market premiums in Hamburg were firmer on slack farmer selling, in turn because of concern about the size of Germany's drought-damaged harvest. New crop standard bread wheat with 12 percent protein for September delivery in Hamburg was offered for sale at 6.5 to 7.0 euros over Paris December against 6.0 euros over on Wednesday.
"Farmers are reluctant sellers as they do not know what they will be able to actually deliver from the new crop," one German trader said. "Some also think prices are too low considering the expectations of drought damage to wheat in Germany, Poland and other Baltic Sea regions." Germany's wheat harvest is underway in the south and centre of the country but not widespread in the drought-hit north.
"It looks like feed grain prices, including feed wheat, will be firm in the near future because of the poor harvest," the trader added. Feed wheat prices in Germany's South Oldenburg market were well over milling wheat levels, September/December last traded at 201 euros.
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