European wheat prices edged higher on Monday on renewed concerns about tight supplies following reports of drought damage to the Australian wheat crop, but a strong euro was keeping a lid on prices, traders said. By 1459 GMT, front month November in Paris-based milling wheat futures was 0.4 percent higher at 266.00 euros a tonne.
The euro slipped against the dollar on Monday but was still close to a near four-month high hit on Friday when disappointing US jobs data fanned speculation the Federal Reserve may launch more monetary stimulus this week. A stronger euro makes euro priced products less attractive for exporting markets and could hamper wheat exports. Wheat production in Australia, the world's no. 2 exporter, is expected to drop to 22-23 million tonnes, analysts estimated. The figure is about 5-9 percent below a government forecast of 24.1 million tonnes and almost a quarter less than last year's record output of 29.5 million tonnes. A new forecast was expected on Tuesday.
In France, the ministry cut its soft wheat crop estimate to 36.5 million tonnes, from the 36.7 million tonnes it had forecast in August, taking the rise to 7.5 percent against the 2011 harvest. Chicago Board of Trade wheat futures rose for the third straight session on concerns about tightening supplies in the Black Sea region, which has struggled with dry weather, and in Australia. There were expectations that Russia, the world's fourth-largest exporter, could soon announce export curbs.
A tightening spread with competing Russian wheat, which could improve French exports, supported EU wheat. France exporte d 765,386 tonnes of soft wheat in July, the first month of the 2012/13 season, down 39 percent on the 1.25 million tonnes shipped in the same month last year, customs data showed on Monday.
However, French wheat exports outside the EU accelerated in August with data gathered by Reuters putting them at over 900,000 tonnes. Traders noted that activity was low, both on the futures market and on the cash market, with silos full in the most important French ports, notably Rouen, due to a lack of sales.
Traders said the market was awaiting a USDA monthly report on Wednesday and the results of two import tenders, by Syria and Jordan. Jordan is seeking offers for November shipment, and traders would closely look at whether they would buy Russian wheat when many think exports could be restricted by then.
Dry and hot weather in France over the past days is hurting maize plants, now at the end of the development phase, and will probably lead to an early harvest - as soon as this week - in the south-west where silos are already well filled. German prices followed Paris up with export hopes again supporting but with business restrained ahead of the key USDA crop report on Wednesday. Standard milling wheat for September delivery in Hamburg was offered for sale up 1 euro at 269 euros a tonne with buyers at around 267 euros.