Euronext wheat futures rose on Monday to their highest in over two weeks, buoyed by a weather-fuelled rally in Chicago and a pullback in the euro from last week's three-year high against the dollar. However, Euronext gave up some of its sharp morning gains as the session highs generated selling interest, while large wheat stocks and sluggish exports still hung over the European market.
March milling wheat on Paris-based Euronext was up 1.75 euros, or 1.1 percent, at 159.00 euros ($196.24) a tonne by 1641 GMT. It earlier rose to its highest since January 11 at 160.00 euros, encouraged by multi-month highs for Chicago wheat as concerns over dry weather for US crops.
"Chicago is supporting this rebound amid heavy short-covering by investment funds," consultancy Agritel said in a note. "From a weather perspective, drought is persisting in winter wheat zones in the US and will have to be monitored." A drop in the euro, as it retreated further from Thursday's three-year top against the dollar, also lent some support to Euronext.
The euro's strength in recent months has curbed western European exports, although some spot demand last week and a tender purchase by top French wheat buyer Algeria brought some cheer to the market. Port data showed a third cargo of French wheat this season was scheduled to load for Saudi Arabia.
In Germany, export sentiment remained dampened by the recent euro rally. "The export outlook remains poor following the euro's strength in the past week and inland demand rather than exports continue to provide the main market driver," one German trader said.
"More trucks are becoming available as the sugar beet harvest reaches its end, enabling more sales to be made into animal feed markets." Standard bread wheat with 12 percent protein content for February delivery in Hamburg was offered for sale at 5 euros over Paris March against 5.5 euros over on Friday, as buyers declined to follow the rise in Paris.
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