European wheat edged higher on Tuesday, buoyed by a rise on US wheat prices and ignoring the declines in other grain and oilseed markets that were undermined by weakness in oil and gold, traders said. The move was also aided by the rise of the dollar against the euro that favours European products on the world markets, but traders noted that volumes traded were thin.
By 1530 GMT Euronext milling wheat futures were around 0.4 percent higher with benchmark November up 0.75 euro at 185.75 euros a tonne, up from a 6-month low hit on Monday. "We are in the typical flat period between two seasons," a French trader said. "The potential for a good crop is there but nothing is finalised yet." Traders said wheat markets were also supported by a fall in Argentina's 2008/09 growing area to its lowest level in 14 seasons.
They also noted Rabobank had cut its forecast for Australia's 2008/09 wheat crop to 20-24 million tonnes from a previous 23-26 million due to dry weather. Italian wheat prices were firm thanks to a renewed demand from millers whose supplies ran low ahead of new crops, which were expected to come with a one or two week delay because of recent rains, traders said.
Soft wheat of standard quality was traded a couple of euros higher than last week at about 235-240 euros a tonne for prompt delivery in northern Italy, without delivery charges. "It is clear now the new crop will be delayed and some millers may have empty stocks. Whether it will be just a week or more will depend on the weather," said one trader.
Trades in new crop wheat were scarce because sellers offered at 210-220 euros a tonne for July to December deliveries, but buyers were asking 200 euros a tonne or even less, traders said.