European wheat futures were higher on Wednesday on strengthening prospects for exports as rival Black Sea wheat fades from the market, despite a setback for French wheat in a tender from Egypt on Tuesday. A strong close in Chicago on Tuesday, when US wheat added more than 1 percent in a technical rally, also provided support to the Paris market, where trade was thin.
January milling wheat in Paris was up 1.25 euros or 0.6 percent at 205 euros ($280) a tonne at 1455 GMT. The contract was holding within a range of 200 to 207 euros after hitting a three-week high of 206.25 euros late last week, dealers said. Egypt, the world's biggest wheat importer, bought 120,000 tonnes of Russian wheat in a tender on Tuesday after buying French and Romanian wheat in a tender last week.
French wheat was heavily offered to Egypt but was too expensive. Egyptian state wheat buyer GASC also said on Wednesday that Black Sea supplies were cheaper than French. "It doesn't really mean that last week was a false start, but it is a warning that prices can't climb every time we sell a cargo to Egypt," one trader said. Traders still expected French wheat to pick up more sales to Egypt as export availability of Black Sea wheat fades.
"We're coming to the end of their window," a futures dealer said of Black Sea origins. "We're getting into a complicated (winter) shipping period for Russia. There was also no Romanian wheat offered to GASC this time." However, the setback in the GASC tender did weigh on cash prices in France, which were slightly lower on Wednesday, brokers said. German wheat premiums were marked down, holding outright prices steady as Paris rose, with physical demand slack despite good export prospects.
Standard new crop milling wheat for January delivery in Hamburg was offered for sale at 3.5 euros over the Paris March contract, down 0.5 euro. "Demand is low from mills and exporters," one European trader said. "There is a brisk programme to load ships in Hamburg and Rostock, but this is old business. There is a lack of new export deals to provide impulse; farmers are reserved sellers." Traders were cheered to see German wheat offered in Egypt's purchase tender on Tuesday after an absence of several months. "German and other west EU wheat are gaining export competitiveness, but we need to see more signs of new sales rather than hopes of sales," another trader said.