European wheat prices rose to a 10-week high on Friday extending gains in US futures due to concerns about weather in Latin America and on a rebound on equities markets, while worries about the euro zone debt crisis remained.
"This upward move was sustained from a technical point of view as the prices left the downward trend at the end of last weekend," French analyst Agritel said. "However, the markets will become less active before the close of the markets for the Christmas weekend," it added.
Signs of renewed momentum in the US economy boosted European stocks and supported the euro on Friday, but any gains in holiday-thinned markets are likely to prove short-lived with lasting concerns about the euro zone debt crisis.
By 1225 GMT, Euronext's most traded March milling wheat contract was 0.27 percent higher at 186.50 euros a tonne after touching 186.75 euros, a price unseen since October 12. But trade was light and the rise capped by a slight rebound of the euro.
Morocco's grain import authority ONICL on Friday said it has a record level of year-end wheat stocks, enough to ensure a normal supply of the domestic market, even after skipping international buys for several months. Both the London and Paris commodities markets will close at 1300 GMT on Friday although Euronext stock markets will operate normal hours.
US soyabean and corn markets edged higher after a brief pause, adding to strong gains in the past weeks with dry weather in South America, which is threatening to reduce corn and soyabean yields, likely to remain a key fundamental theme as crops in the region undergo critical development phase. Despite plentiful global supplies, US wheat futures benefited from the rise on other markets and short-covering.
Feed wheat futures in London were also slightly higher with May up 0.70 pounds or 0.5 percent at 147.50 pounds a tonne. The contract is on track for a weekly gain of nearly 2.5 percent. UK grains have shown a robust performance in face of sterling strength (euro weakness)," UK farmers co-operative Openfield said in a market note on Friday.
"UK wheat has been sold to Iberia and Ireland for December shipment this week with further tentative interest for January shipment," the report added. Sterling paused its rally against the euro on Friday as better risk appetite prompted investors to trim bets to sell the single currency, but analysts expected the pound to resume its climb if pessimism about the euro zone debt crisis resurfaced.
In Germany, prices were firm helped by early strength in Paris and strong closure of Euronext on Thursday with business closing down for the Christmas break. Standard new crop bread-quality wheat for January delivery in Hamburg was offered for sale up one euro on late Thursday levels at 197 euros a tonne with buyers around 193 euros.
"The market is very quiet with many industrial buyers already on their Christmas holidays," one trader said. "Mainstream trading will resume in the first week of January." Hamburg milling wheat selling prices remained around 7 to 10 euros above Paris futures as farmers retained produce in the belief 2012 supplies will be tight after Germany's disappointing 2011 wheat harvest.
Wheat prices in Italy, a major grain buyer in Europe, were little changed from Thursday in thin pre-holiday trade with support from firm prices on major west European markets and a modest increase in local milling demand, traders said. Bread wheat was traded at 205-209 euros a tonne for prompt delivery, without delivery costs, in line with levels set at a key weekly session of Bologna's grain bourse on Thursday, they said.