Euronext wheat futures at six-week high

Euronext wheat futures extended a rally to a new six-week high on Friday on technical momentum and strong overseas demand. Traders said gains were capped, however, by large global supplies and the need to remain competitive in export markets.
Benchmark December milling wheat on the Paris-based Euronext exchange was up 0.75 euro, or 0.4%, at 173.75 euros ($190.05) a tonne by 1617 GMT. It earlier touched its highest level since August 12 at 174.50 euros, after Thursday's breaking of chart resistance around 172 euros created buying impetus.
A second day of gains on Friday for Chicago wheat, which was recovering from losses earlier in the week, also underpinned Paris prices. The sale of a cargo of French wheat to Egypt in a tender on Wednesday along with the scheduled loading of several vessels in Rouen bound for Morocco had boosted export sentiment.
"French wheat is competitive but we have to be careful that we stay competitive," a futures dealer said. "There were 60,000 tonnes sold to Egypt but we need more of that." Weakness in the euro, which touched a new low since May 2017 against the dollar, was also improving export prospects for western European grain.
Export interest was also being fuelled by a tender by Saudi Arabia to buy one million tonnes of feed barley. Barley premiums on the French market were firmer for a second day on Friday as market participants anticipated the Saudi purchase, which could be spread between various European Union and Black Sea origins.
Results are expected on Monday. The Saudi barley tender was also the focus in Germany, where the wheat market has been subdued amid a lull in demand.
"Germany is traditionally a large exporter of barley to Saudi Arabia, so there is optimism some of the business will be sourced in Germany," one German trader said.
"About 60,000 tonnes of barley was shipped from Hamburg to Saudi Arabia so far in September following shipments from Germany in August." Wheat premiums in Hamburg were again little changed.
Standard bread wheat with 12% protein for October delivery in Hamburg was offered for sale unchanged at 2.0 euros under Paris December. Buyers were seeking at least 3.0 euros under Paris. In monthly supply and demand data, the European Commission raised its estimate of this year's EU soft wheat harvest to 145 million tonnes from 142.7 million. In France, farmers started sowing soft wheat in the week to September 23, with 1% of the expected area sown, farm office FranceAgriMer said.