EU wheat near highs as strong demand continues to support

• Benchmark March milling wheat on Paris-based Euronext unofficially closed 0.9% higher at 195.75 euros a tonne. It spent a lot of the day near the high of 196.25 euros hit on Wednesday last week, a price last seen late August 2018.

PARIS: European wheat prices hovered near 1-1/2 year highs on Monday, supported by good international demand, with little sign that the trend would ease in the coming weeks, traders said.

Benchmark March milling wheat on Paris-based Euronext unofficially closed 0.9% higher at 195.75 euros a tonne. It spent a lot of the day near the high of 196.25 euros hit on Wednesday last week, a price last seen late August 2018.

The contract had already touched these levels last week, with profit-taking recorded at around 195-196 euros per tonne.

A rise to a one-year high on the French cash market due to logistical bottlenecks caused by strikes over pension reform prompted farmers to sell, analyst Agritel and a trader said.

"But for the moment the bullish trend remains in place with the prospect of a very small wheat area in western Europe for the 2020 crop year and with low stocks from last season," Agritel said in a weekly note.

Prices were supported on Monday by a tender from Algeria to buy milling wheat.

Traders saw France, Algeria's main wheat supplier, winning most if not all of the tender as Argentine wheat is heading towards Asia. Argentine wheat shipments to Asia are poised to climb to a record high over the next two months as a drought curbs Australian production and Black Sea inventories tighten, two trade sources said.

"The Algerian tender news supported prices, especially with the Argentine wheat going to Asia, there is a good chance French wheat will make it," one trader said.

The rhythm of West European wheat exports remains strong, EU data showed, with total soft wheat shipments since the start of the 2019/20 season totalling 15.7 million tonnes by Jan. 19, 71% above the volume cleared by Jan. 13 last year.

In Germany, cash premiums in Hamburg were again underpinned, remaining well over Paris Euronext because of strong export shipments from German ports.

Standard bread wheat with 12% protein for January delivery in Hamburg was offered for sale unchanged at 4.5 euros over the Paris March contract. Buyers were offering up to 3.5 euros over Paris.

"The good level of export shipments from German ports continues, including to destinations which are usually in the firm grip of France," one German trader said.

"The lack of a resolution to French transport strikes and firm Russian prices mean there are expectations more wheat export business will come to Germany in the coming weeks."