European wheat futures hit six-month high

European wheat futures in Paris hit a six-month high on Wednesday, buoyed by adverse crop conditions around the world and further export-boosting weakness in the euro. December milling wheat, the new-crop benchmark and most active contract on Paris-based Euronext, settled up 2.50 euros, or 1.4 percent, at 177.75 euros ($212.75) a tonne.
The contract had earlier hit its highest since late October at 178.25 euros. Euronext was adjusting to strength in US wheat on Tuesday when much of Europe was closed for a holiday. US futures were hesitant on Wednesday but remained underpinned by dryness for hard red winter wheat crops in US gain belts, while traders were also monitoring drought in Australia and a dry spell forecast in the Black Sea region.
"People remain bullish amid the world weather conditions," one futures trader said. "There are concerns everywhere and it looks like West Europe is the only region relatively spared." Non-commercial market participants cut their net short position in Euronext's milling wheat futures and options in the week to April 27, data from Euronext's second Commitment of Traders report showed on Wednesday.
In Germany, cash market milling wheat premiums in Hamburg were cut as buyers refused to follow rising Paris futures. Standard bread wheat with 12 percent protein content for May delivery in Hamburg was offered for sale down 1 euro at 2.50 euros over Paris May. "Demand is slack as German mills generally have low flour demand and export loadings remain well below previous years," one German trader said. "Warmer springtime weather has arrived at last and grain crops are starting to catch up on their growth, which was slowed down by the prolonged winter this year."
Attention was again on high feed wheat prices. Feed wheat prices in Germany's South Oldenburg market were again above milling wheat, with May onwards delivery offered up 1 euro at 179 euros a tonne with buyers seeking 178 euros. "Wheat looks a comparatively cheap source of protein for feed producers with soyameal prices currently so high," another trader said.