European benchmark wheat prices in Paris touched new contract highs early on Monday, on expectations poor crop weather in Argentina and Australia will bring tighter global grain supplies, but lost gains in late trade as US wheat futures fell. The Paris January wheat contract was down 0.50 euros or 0.2 percent at 249.25 euros a tonne by 1708 GMT, after touching a new contract high of 250.50 euros in the morning.
Paris March wheat was up 0.25 euros at 246.50 euros, after climbing to a contract high of 247.50 euros earlier in the day. European business volumes were thin in post-Christmas trade with many market participants taking extra time off and Britain closed for a public holiday, traders said. Full market action was not expected to resume until next week.
A weaker opening by US wheat futures in Chicago on Monday, in turn caused by concerns about the impact on commodity demand from China's interest rate rise, caused Paris to give up earlier gains. But the background concern about the tight global supply outlook kept French prices well supported, traders said.
"The market doesn't seem to want to fall for the moment, even with Chicago dropping a bit," one futures dealer said. Paris futures are trading at levels last seen in March 2008 when prices were easing back from all-time highs. "Prices remain firm at the start of the week and only the rise in Chinese interest rates briefly dented the overall trend," French grain analysts Agritel said in a note. China's interest-rate move over the weekend weighed on trading in Chicago wheat but French operators shrugged off the potential impact on commodities markets.