EU wheat up again, weak euro boosts export hopes

MADRID: European wheat rose for a 10th straight session on Thursday as renewed weakness in the euro fed export hopes, although falls on Chicago crimped gains late in the day.

* On the Euronext exchange in Paris, the benchmark March milling wheat contract added 1.25 euros, or 0.65 percent, to 194.50 euros a tonne by 1655 GMT, a level last seen three months ago.

* Volumes were thin at 5,116 lots or 255,800 tonnes, because many traders were away for the year-end holiday.

* "There is little selling by French cooperatives. We are also seeing short-covering ahead of the end of the financial year, the weaker euro and the crude oil price," a German trader said about Paris prices.

* "There are some dips as trade is thin, and small buy or sell orders can move the market."

* Traders expected the rally to consolidate in the New Year as worries surface over the euro zone sovereign debt crisis and the strength of the global economy.

* Agriculture consultancy ODA also said the current rally could soon stall as prices hit resistance, but they remained bullish for trading prospects at the start of the new year.

* "The dry weather forecasts in Latin America should continue to offer support to grains across the board," ODA said.

* European rapeseed futures eased, with the front-month February contract edging down 0.25 percent to 438.25 euros/tonne.

SPAIN

Spanish physical wheat drifted up amid thin holiday season trade in the major grain importing country to line up with recent gains on futures markets in Paris and Chicago.

Traders said the market had been waiting for weeks for Brussels to open bidding in the New Year for permits to import wheat under the tariff-rate quota scheme.

Prompt feed wheat in leading grains port Tarragona was quoted up 2 euros on the day to 206 euros/tonne. January-March wheat was quoted at 207 euros/tonne, the first time it has traded at a premium to prompt in several weeks.

"In wheat the market impact of low port stocks has been more limited than may have been thought. Whether a lot of domestic wheat was traded beforehand or demand was covered, only a mild rebound has been posted," a report from the Mercolleida agricultural exchange said.

Weak demand from struggling livestock farmers in what is Europe's biggest pig feed producer had also slowed down trade, dealers said.

GERMANY

* Germany's market was little changed at recent high levels on background concern about South American drought, short-covering and farmers sitting on produce.

* Standard new crop bread-quality wheat for January delivery was offered unchanged at 199 euros per tonne with buyers at around 196 euros.

* "There is resistance by buyers at the 200 euro mark," a German trader said. "The main interest today is in new crop and feed wheat. Low levels of farmer selling remain supportive."

* "The drought in Brazil and Argentina could shake up the global market in coming weeks. This is generating some short-covering as people fear a new bull market if South America suffers heavy damage to corn and soybean crops."

* Hamburg new crop September wheat traded at 191-192 euros a tonne, flat to one euro up on the day.

* Short-covering by animal feed makers brought feed wheat trades at close to milling wheat prices.

* Feed wheat for February-June delivery in the South Oldenburg market near to the Netherlands traded at 197 euros a tonne, although traders stressed this included several euros for trucking charges so feed wheat was still below milling levels.

Copyright Reuters, 2011