AMSTERDAM: European wheat prices accelerated gains on Tuesday afternoon, setting highs last seen nearly three months ago as worries about dry weather in South American agricultural powerhouse Argentina bolstered grain prices at the Chicago Board of Trade.
CBOT soybean futures rallied 2.8 percent to their highest level in more than a month in early trading amid worries dry weather would limit the size of Argentina's crop. Concerns about South American weather also supported corn futures.
By 1620 Euronext milling wheat futures , the most traded contract March was 2 percent higher at 190 euros a tonne, also supported by a new fall in the euro that made European grain exports more attractive on world markets.
Persistent worries about Europe's debt crisis kept the euro near an 11-month low on Tuesday, and traders said it may face more selling if Italy struggles to raise money at this week's year-end debt auction.
Trading was light though, with about 4,000 lots of wheat, or 200,000 tonnes, having changed hands an hour before the close of trading as many traders were away for the year-end holiday.
Agritel analysts noted that uncertainty over the health of the global economy was likely to curb market players' enthusiasm.
US economic indicators released on Tuesday were a mixed bag. Consumer confidence rose to an eight-month high in December as households grew more upbeat about job prospects, but other data showed the housing market likely remains a drag on economic growth.
European rapeseed futures were also higher with front month February up 0.9 percent to 436 euros a tonne as oil rose to nearly $109 a barrel as Iranian threats to cut off the key oil shipping route through the Strait of Hormuz added to concerns about supplies from the Middle East.
In Germany, the market was still in holiday mode, with little activity and prices often nominal.
Standard new crop bread-quality wheat for January was quoted for sale nominally on a level with Paris prices.
"The market is very quiet with many industrial buyers on their Christmas holidays," one trader said. "You cannot read much into the prices because of the thin level of market participation."
Mainstream trading is expected to resume in the first week of January.
"There is some market talk that some old export business will need to be covered in the next couple of weeks, which could provide some activity," the trader said.
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