EU milling wheat prices rise on supply concern

European milling wheat prices rose on Wednesday in thin volumes, buoyed by a lack of available supplies and hopes for more exports, traders said. Paris front-month May wheat, Europe's benchmark, was 2.00 euro or 0.8 percent higher at 227.00 euros a tonne by 1244 GMT. New crop contracts were also supported by rising concerns about lack of rainfall in top EU producers France and Germany. Paris November was up 1.00 euro at 202.50 a tonne.
"We have a rise in temperatures, dry wind, and no rain forecast for the coming days. It's going to be a growing (supply) focus," a trader said. Dry weather in the US Plains was also pushing up US wheat futures on Wednesday, further underpinning EU markets. Mediterranean countries with immediate wheat needs would probably have to turn to the European Union, mostly France in the near future, traders said. This would happen at a time of increasingly tight supplies following brisk exports in recent months.
Traders pointed to Morocco, which is said to have further import needs despite an already long line-up of ships being loaded at French ports. Private Syrian buyers were also in the market for wheat and barley, traders said. Traders said the Paris May contract was expected hover around 230 euros in coming days while November was seen at between 200 and 205 euros.
The market was also awaiting a key report on US planting and quarterly stocks by the US Department of Agriculture (USDA) next week. The euro fell to a session low on Wednesday with some investors disappointed that the European Union would take more time to increase the size of the eurozone bailout fund. Germany's market rose, pushed up by the rise in Paris, the strong trend in US futures and a lack of selling interest.
Standard bread-quality wheat for April delivery in Hamburg was quoted up four euros at 237 euros a tonne but with very few sellers seen in the market. German prices are currently maintaining a level of around ten euros over Paris' May contract, traders said. "Concern is starting to grow about poor weather both in France and Germany but the major price influence remains international markets," one German trader said. The German farm co-operatives association on Friday forecast a 2011 wheat crop only 2.6 percent higher than the weather-damaged 2010 crop.