Paris wheat futures rose to their highest in almost a month on Wednesday as the market again tracked weather-fuelled gains in US prices. Traders, however, were cautious about further gains for European prices given improving crop conditions in the region after rain in the past month.
The European market also found some support from a tender purchase by Algeria, expected to be mainly sourced in France, although export prospects remained clouded by strong competition from Black Sea countries and recent strength in the euro. Front-month September milling wheat on the Paris-based Euronext exchange settled 1.75 euros, or 1.0 percent, higher at 168.50 euros a tonne.
It earlier rose to 169.25 euros, its highest since May 12, filling a chart gap as it pulled away from a contract low of 165.00 euros hit on Monday. The December contract, which has a greater open interest, also reached its highest since May 12 at 173.25 euros a tonne, before ending 1.75 euros higher at 172.75 euros. "Tracking pretty much the whole rise in Chicago seems a bit overdone for Euronext," a futures dealer said. Chicago futures rose to a one-month high as investors continued to worry about dry weather affecting spring wheat in the United States and Canada, as well as disappointing early protein indications from the US hard red winter harvest.
But traders said weather issues had been exaggerated by short-covering by investments funds and that a slight pullback in US spring wheat futures after a near two-year high suggested the rally may be losing impetus. Algeria's purchase of around 450,000 tonnes of milling wheat for August shipment, in an optional-origin deal seen as likely to be sourced mostly from France, was welcomed after Black Sea origins like Russian wheat dominated recent export tenders.