EU wheat prices rise

Wheat prices in the European Union rose on Monday, tracking a broad-based advance in commodity markets although the strength of the euro helped to cap gains. Commodity markets were buoyed by an increase in the risk appetite among investors as hopes grew, that eurozone leaders would propose fresh measures to resolve the debt crisis.
Front month January milling wheat futures in Paris stood 1.25 euros or 0.7 percent higher at 182.25 euros a tonne at 1405 GMT with prices slowly regaining ground following a prolonged slide. Dealers said the market was looking to consolidate after the contract slid about 18.5 percent from a late August peak of 216.50 euros to a low last week of 176.50 euros.
The scope for a major rebound was, however, seen limited unless there was a significant improvement in the economic outlook, they added. "Investors remain nervous most of all against a background of year-end closing of positions," said analysts at French farm consultancy Agritel. "The key for price direction will continue to depend on macroeconomic developments for a while longer." The euro on Monday recovered from Friday's seven-week low on hopes of progress on the euro zone debt crisis ahead of a European Union summit next week although investors were skeptical on the likelihood of decisive action.
Feed wheat futures in London were also higher with January up 1.75 pounds or 1.2 percent at 144.00 pounds a tonne. Dealers said supplies of feed wheat remained ample with recent mild weather helping to curtail domestic demand. In Germany, prices rose in line with the strength in Paris and US futures but with the rise in the euro capping gains.
Standard new crop bread-quality wheat for January delivery in Hamburg was offered for sale up two euros on late Friday business at 191 euros a tonne with buyers at around 188 euros. "The international price strength is providing the support today although premiums over Paris are slowing because of the sluggish export outlook," one German trader said. "In the past week German buyers only covered their immediate needs because of the expectation of weaker prices and I think we will see the same pattern this week."
"The export outlook is not good and the recovery of the euro today will be a new hurdle to new sales," said the trader. German prices have held well over Paris levels in recent months following a disappointing German harvest this summer. Low water levels on the Rhine and Danube rivers in Germany continued to cause transport problems. An exceptionally dry November has caused water levels on both rivers to fall sharply.
Shipping costs along the Rhine are at about double the normal levels, traders said. Efforts are being made to delay shipments or to transfer freight to road transport, the head of the German inland waterways shipowners' association said.
Iraq issued a tender on Monday to buy a minimum of 50,000 tonnes of wheat and 30,000 tonnes of rice from all origins, a spokesman for the Iraqi grain board said. European rapeseed futures were also higher with front month February up 3.50 euros or 0.85 percent at 414.50 euros a tonne.