EU wheat firms on tight fundamentals but weak Chicago weighs

PARIS: European wheat prices rose on Monday, supported by Saudi's large purchase and concerns about Australian and Black sea supplies, but a low open in Chicago and a firm euro waned on prices in late trade.

Benchmark December milling wheat on Paris-based Euronext was up 0.6 percent by 1600 GMT to 199.00 euros a tonne.

"Every week feels the same on the wheat market where a short-term bearish mood conflicts with tight fundamentals in the longer term," French consultancy Agritel said in a weekly note.

Russia's food safety watchdog has beefed up quality controls on grain exports due to complaints from major buyers and the lower quality of the crop, it said on Friday, adding that the more stringent checks were not aimed at limiting grain exports.

Exports out of drought-hit Australia, the world's fourth largest wheat exporter, could be lower than expected as widespread frost in the west part of the country dented hopes the region could provide a much needed boost to output.

Also supportive was Saudi's purchase of a hefty 630,000 tonnes of optional-origin wheat at its latest tender.

The wheat was expected to come from the Baltic region, Germany, France and the United States, traders said.

On the French cash markets, brokers noted that the eastern Moselle region was blocked by low waters, with significant additional costs. The situation was not expected to improve soon with no rainfall forecast in the coming days.

The euro rose not far from $1.17 on Monday as the dollar slipped broadly on worries about a new set of US tariffs on Chinese goods in the latest escalation of the trade conflict between the world's two largest economies.

A higher euro hurts the competitiveness of euro-denominated goods on world markets.

In Germany, cash premiums in Hamburg for high protein wheat were little changed, with traders saying only a small part of Saudi's purchase would be sourced from Germany.

Saudi Arabia is traditionally a larger buyer of German wheat.

"I think the main part of the tender is likely to be sourced from the Baltic Sea region, especially Lithuania," one German trader said. "It is possible that one consignment will come from Germany but I would be surprised if more was sourced here."

German wheat export supplies have been reduced after a drought and heatwave damaged the country's harvest this summer.

Wheat with 12.5 percent protein, the same grade as sought in the Saudi tender, was offered for sale unchanged at a premium of 9 euros over Paris December for October/March delivery in Hamburg.