European wheat futures rose on bargain buying on Tuesday after eight sessions sessions of falls. May milling wheat on Paris-based Euronext was up 1.5 euros, or 0.9 percent, at 167.25 euros a tonne by 1617 GMT after touching a contract low of 165.25 euros on Monday. Gains were capped, however, by the strength of the euro against the dollar, making euro-denominated grains more expensive on world markets.
"The euro/dollar remains a strong handicap for European wheat," one European trader said. "The market has a downside potential compared with US wheat, (which is) far more competitive on paper to destinations like Algeria." The dollar steadied against the euro on Tuesday, hovering above four-month lows. Chicago wheat also rose as buyers were tempted by low prices and in positioning ahead of closely watched US sowing estimates from the US Department of Agriculture (USDA) this week.
In Germany, the mood remained depressed by a combination of diminished expectations for new export sales and prospects for a large harvest this year. Standard wheat with 12 percent protein content for April delivery in Hamburg was offered for sale down 0.5 euros at 4 euros over the Paris May contract. Buyers were seeking 3 euros over. "The recent strength of the euro has caused damage to the export prospects for Germany," one German trader said. "Port loadings are also not enough to buck up the market, with two ships set to load around 65,000 tonnes of wheat each for Saudi Arabia, along with a small shipment of 16,500 tonnes for Libya."
Warm weather is forecast for most of Germany this week, reducing the likelihood of late frost damage to crops and raising expectations for a large crop. "The probability that Germany will suffer serious frost damage is now getting very small and the likelihood of a large crop this summer, and therefore ample supplies, is increasing," the trader said.
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