LONDON: Wheat prices in western Europe rose on Friday, boosted by strong gains in US grain markets as dry weather in the Midwest growing region remained the key market focus.
"The weather market has allowed us to get close to some major resistance levels," a French futures dealer said. "People are going to keep monitoring the US weather and what will be particularly watched will be Monday's US crop ratings."
Benchmark November milling wheat on the Paris-based futures market was up 1.50 euros or 0.7 percent at 215.75 euros a tonne by 1206 GMT.
Technical resistance between 216 and 218 euros curbed prices after the contract peaked at 216.00 euros on Thursday, a highest level in more than three weeks.
Declining crop ratings for corn and soybeans in weekly updates from the US Department of Agriculture have fuelled crop concerns and led operators to cut their yield forecasts.
Operators were also keeping an eye on hot weather in the Black Sea region after forecasters cut crop estimates for major exporters Russia and Ukraine.
"Russia has benefited from rains this week, but the crop is still in danger as most of the rainfall was seen in the north-east of the country, while half of the production and almost all the exportable wheat is in the southern regions, leading to questions as to the size of the country's new crop exportable surplus," UK merchant Gleadell said in a market note.
In France, crop conditions were more favourable, with concern focused on heavy rain damaging some crops.
"We should have some good yields," the dealer said. "There is a risk of disease (due to rain) but you don't get the impression people are panicking."
In Germany, prices rose in tandem in to the rise in Paris with the market waiting to see if more rain will fall to improve Germany's harvest outlook and delay the start of harvesting.
Standard milling wheat for September delivery in Hamburg was offered for sale up 0.5 euro at 220 euros a tonne with buyers at around 218 euros.
Feed wheat for nearby delivery in the South Oldenburg animal feed grains market near the Netherlands was again quoted over milling wheat, but unchanged at 233 euros a tonne for nearby delivery with buyers at around 231 euros.
"We have had a lot of rain in much of the country over the last three weeks and signs are that the crop is improving," one German trader said. "But more rain is still needed in the east and with cool and generally wet weather forecast for the near future, people are starting to expect the German harvest will start later rather than sooner."
"This concern about a later harvest start is helping to keep German prices over Paris."
Germany's leading grain trading house Toepfer International on Friday raised its forecast of the country's 2012 wheat crop to 22.71 million tonnes from 21.4 million tonnes it estimated in May. This would make the crop slightly above the 22.70 million tonnes harvested in 2011.
Wheat in most of Germany has profited from repeated rain in the past few weeks following a very dry spring, Toepfer said in a report. Average German wheat yields are now expected but dryness could damage yields in the east, it said
"In Germany, farmers are becoming more willing to sell the new crop," Toepfer said.
Rain is forecast for some of the driest northeastern areas of Germany up to Tuesday.
Feed wheat futures in London were also higher with November up 0.25 pounds at 160.00 pounds a tonne.
Rapeseed futures were also higher, in step with US soybeans and also supported by a slight recovery in crude oil after an 18-month low.
November rapeseed was up 1.50 euros or 0.32 percent at 467.50 euros a tonne.
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