European wheat futures in Paris on Tuesday rose to their highest in almost two weeks, supported by fresh gains in Chicago as global weather risks encouraged markets to recover from recent lows. Harvests in Australia and Argentina are being threatened by dryness.
"The weather is going to stay dry for south hemisphere crops and also in the northern hemisphere," a futures dealer said. "That plus corn rallying a bit is causing some short-covering and a small price recovery." December milling wheat on the Paris-based Euronext exchange was up 1.50 euro, or 0.8%, at 169.75 euros ($187.44) a tonne at 1609 GMT, its highest since Aug. 29 as it extended a rebound from last week's life-of-contract low of 165.75 euros.
The run-up to Tuesday's expiry of front-month September futures had also kept deferred delivery positions firm, dealers said.
France's Farm Ministry on Tuesday raised its estimate of this year's French soft wheat harvest by over 1 million tonnes to 39.45 million, the second-highest volume on record. The revision drew little reaction as many market participants had already factored in a bumper crop.
Physical brokers said silos at France's main grain port of Rouen were well stocked amid a lull in export demand, with the market awaiting a next tender by Algeria and a possible early opening of Morocco's annual import campaign. Prices in Poland fell in the last week due to larger inventories held by flour mills after a good crop this summer and expectations of good supplies from the country's new crop corn harvest, now in the starting blocks.
The Baltic States including Lithuania were expected to be the first choice by exporters deciding where to source their sales to Saudi Arabia on Monday. "Stiff competition from the Black Sea and other Baltic countries makes Polish wheat export sales difficult," one Polish trader said. "Polish 12.5% protein wheat is offered in export markets at level the Paris December contract while Baltic State offers are at around 2.50 euros below Paris."