PARIS: European wheat futures came off an 18-month high on Wednesday as a US weather rally stalled, although Paris prices stayed firm on technical buying and expectations that a purchase by Algeria would be sourced mainly in France.
December milling wheat, the most active contract on the Paris-based Euronext exchange, settled up 1.25 euros, or 0.7 percent, at 187.00 euros a tonne.
It earlier touched its highest since January 2016 at 189.00 euros, as US wheat futures hit new multi-year highs in the latest flurry linked to fears of weather damage to spring wheat.
However, the US market, which was resuming trading after Tuesday's Independence Day holiday, later turned lower.
"We're stumbling along in relation to the US market which is hesitating between extending the rally or having a pause," one Euronext dealer said.
Weather forecasts calling for hot, dry conditions in part of the northern US spring wheat belt were maintaining concerns about poor crop conditions.
Euronext said weather concerns fuelled increased activity in its commodity derivatives last month, with average daily volume up 1.6 percent from June 2016 and 63.3 percent higher than the previous month.
In Europe, there was now concern rain could spoil grain quality, particularly in Germany.
"German wheat now urgently needs more sunshine after a rainy June to generate the wheat quality needed to fill any gap left in export markets by the US," one German trader said. "There is nervousness as a lot of rain is still forecast up to Sunday."
A Reuters poll on Wednesday gave a median estimate of 141.0 million tonnes for this year's European Union soft wheat crop, up sharply from last year's disappointing harvest but well below forecasts made before hot, dry spells this spring.
Rain risks to German wheat quality could cloud what is seen as a major opportunity to replace high-protein US spring wheat in export markets.
German cash premiums for high protein wheat in Hamburg rose again.
The highest quality E grade wheat with 14 percent protein content for September/December delivery in Hamburg was offered for sale at a premium of 22-23 euros over Paris December against 21 euros over on Tuesday.
Standard wheat with 12 percent protein content was offered for sale at 4 euros under the Paris December contract for September delivery in Hamburg against 2.5 euros under on Tuesday.
European prices drew support from a tender purchase by Algeria, estimated at 420,000 tonnes, that was tipped to be mostly sourced from France.
However, a similar sized tender purchase by Egypt underlined the advantage of Black Sea origins in the world's biggest wheat importing country.
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