HAMBURG: European wheat futures touched their highest level in two weeks on Wednesday on support from rising US prices as the poor condition of wheat crops in the United States added a further risk to weather-reduced global grain supplies.
* Benchmark January milling wheat on the Paris futures market was up 2.50 euros or 0.91 percent at 275.75 euros a tonne by 1658 GMT.
* The contract earlier reached 276.25 euros, a level last seen on Nov. 9 and close to a four-year high for the market of 279.25 euros struck in early November.
* Chicago wheat futures jumped nearly 3 percent on Tuesday, fuelled by concerns over record-low ratings for drought-affected US wheat crops, and rose again in early US trading on Wednesday, underpinning European prices.
* The poor state of developing US wheat plants has raised further concern about global supply after a string of weather-reduced crops in major producing countries this year ranging from Russia and Ukraine to Australia and Britain.
* Supply snags in major producing countries like Russia and Argentina have opened up export opportunities for European Union wheat, helping to drive Paris futures to their current levels.
* "The (supply) outlook for 2013 is not great," a futures dealer said. "Even if agronomists consider it's too early to make any predictions, it's already clear that we need winter not to be too harsh given the fragile world situation."
* A wheat purchase tender being held by Algeria this week could bring a fresh export sale for France, traders forecast.
* In other positive export news, French port data showed a first wheat cargo of the season for Libya reported earlier this month is now loading at La Pallice on the west coast.
* The United States, seen as the main competitor to European wheat, could soon face logistics bottlenecks as the export trade faces the possible closure in December and January of the Mississippi River as drought makes the river too shallow for ships to sail.
* But an announcement by Ukraine's farm ministry that the country could export more than previously anticipated may add some additional export competition from the Black Sea region.
GERMANY
* German prices were marked up in line with Paris with export optimism and high feed wheat markets keeping prices over French levels.
* Standard milling wheat for January delivery in Hamburg was offered for sale up 2 euros at 285 euros a tonne with buyers at around 283 euros.
* "The market is holding its premiums over Paris with export optimism and good feed wheat demand supporting," one German trader said. "Farmers in north Germany are also unwilling to sell as the firm price trend continues."
* "There is a good export shipping lineup in German ports with talk of a couple of fob cargoes for December shipment which still need supply cover."
* Continued demand and tight supplies kept German feed wheat around the same level or even above milling prices. Feed wheat for nearby delivery in the South Oldenburg market near the Netherlands was offered for sale unchanged at 283 euros a tonne with buyers around 280 euros.
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