EU wheat gains at 10-month high on weak euro

European wheat futures extended gains on Tuesday to set a fresh 10-month high, as a weaker euro and dry weather concerns in some key world wheat-growing regions continued to buoy prices. December milling wheat, the most active contract on the Paris-based Euronext exchange, was up 2.0 euros or 1 percent, at 189.00 euros ($218.45) a tonne at 1557 GMT.
It earlier reached 190.50 euros, its highest since July 12, 2017, buoyed by technical momentum as the contract filled a chart gap. Euronext also drew support from higher Chicago futures as US trading resumed after Monday's public holiday, although Chicago later gave up most of its gains.
Concerns about dryness hurting crops in parts of Canada, Australia and Russia, all major wheat exporters, have added to persistent worries about drought damage to US winter wheat. But traders said there was still time for rain to help crops in top wheat exporter Russia while conditions in western Europe remained good.
The French market was also grappling with logistical snags caused by a continuing rail strike. "It's a really tough market because we don't have the transport to do deals on old crop and for new crop exporters are holding back because of the volatility on Euronext," a French cash broker said.
Algeria issued an international purchase tender to buy milling wheat for July 1-15 shipment, traders said, suggesting the country had not fully met its needs in a previous tender covering the same month. Algeria is the largest overseas market for French wheat, but traders said the first half of July was an awkward period for suppliers, with new crop availability dependent on the harvest pace and old crop affected by a series of rail strikes in France.
In Germany, cash market premiums in Hamburg remained at a sharp discount to Paris futures as buyers declined to accept the recent surge in Euronext. Standard bread wheat with 12 percent protein content for May delivery in Hamburg was offered for sale at 17 euros under Paris December against 8 euros under Paris this time last week.