European wheat prices rose on Thursday for a third day in succession to a new seven-month high, as US futures held on to Wednesday's sharp gains and the euro eased against the dollar. Some traders expressed surprise, however, at the latest rise given a backdrop of high global supplies and mostly favourable growing conditions for wheat in the northern hemisphere.
May milling wheat, the most active contract on the Paris-based Euronext exchange, settled 0.50 euro, or 0.3 percent, higher at 177.25 euros a tonne. It rose earlier to 178.00 euros, its highest since July 26. After breaking chart resistance at 175 euros this week, the next significant barrier would be last summer's high of 180 euros, traders said.
Chicago futures consolidated after an earlier two-week high, but held on to most of a 3 percent gain on Wednesday despite a seven-week high for the dollar. The rally in wheat markets this week was fuelled by concern over dryness in parts of the US Plains wheat belt, a big tender purchase by top wheat importer Egypt, and spillover by a jump in corn and soybean prices amid talk of changes to US biofuel policy.
"Euronext wheat is extending its run despite the absence of new fundamental factors. It is being supported by the US market which is holding up relatively well in the face of the rising dollar," a futures dealer said. The continued strength of European futures was also linked to investment fund flows, traders said.
Weekly official data showed European Union soft wheat exports continued to fall further behind last season's pace, with 16.1 million tonnes exported by February 28, down 12 percent from a year ago. This included a modest 130,000 tonnes exported this week. In its first crop outlook for the upcoming 2017/18 season, the European Commission forecast EU soft wheat production would rise to 143 million tonnes from 134.3 million this season, supported by an expected recovery in the French crop after last summer's dire harvest.
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