PARIS: European wheat prices rallied on Wednesday on concerns about dry weather in large European grain-producing countries and the United States, with the market also seeking more clarity on damage to crops from a cold snap in France.
The most-traded September contract on the Paris-based milling wheat futures was up 1.4% by 1525 GMT after hitting a high of 206.25 euros a tonne in earlier trade. It gained 13 euros or 7% over the past two weeks.
The rally on the Chicago wheat market was even stronger on Wednesday, with the most-traded contract up 3% at $6.48-1/2 a bushel.
The outlook in Europe remains dry for the two coming weeks as weather forecasts show virtually no rain in the EU’s largest wheat producer France and only little in Germany by April 22.
The water deficit is already in place in US spring wheat areas in the north of the country.
It is too early to estimate the impact on grain crops from a severe frost that has hit France, but there is some concern over damage in the central and southern parts of the country, farm office FranceAgriMer said on Wednesday.
In supply and demand estimates, FranceAgriMer raised its forecast of French soft wheat exports outside the European Union’s 27 countries to 7.55 million tonnes from 7.45 million tonnes seen last month, to take account of previous sales and expected demand from Algeria and Africa.
In Germany, slow export demand continued to burden the Hamburg market.
“On the demand side, there is a lack of wheat tenders in the market with importers on the sidelines,” one German trader said. “The big question is what Russia exporters will do as the next phase of Russia’s export taxes approach.”
The existing Russian export tax of 50 euros a tonne runs to June 2, when it will be replaced by a floating export tax to be set weekly.
“Some importers seem to hope Russia’s new export tax will be under 50 euros and may wait for the few weeks, delaying purchases in the hope the tax will be reduced,” the trader added.
Standard 12% protein wheat for April delivery in Hamburg was offered for sale at level Paris May against 2 euros over on Tuesday. Demand was so thin that prices were sometimes nominal, traders said.