EU wheat rises on strong Chicago, weaker euro

PARIS: European wheat prices rose again on Monday as crop weather in agricultural powerhouses Brazil and Argentina bolstered futures in Chicago, while a new weakening of the euro boosted European grain export hopes.

* March milling wheat in Paris rose 1.7 percent to 182.00 euros by 1625 GMT.

* "Worries linked to fundamentals and the weather situation in Latin America are offsetting recession risks linked to the European debt crisis," Agritel said.

* Trade was subdued, with cash markets closed for the year-end holidays. Traders warned trading could be erratic as players still in the market adjusted positions before closing their books.

* Chicago Board of Trade wheat futures followed a rally in corn futures early on Monday on concerns that hot and dry weather would cut crop yields in Brazil and Argentina, traders said.

* Fields in parts of Brazil, which is set to topple the United States as the world's top soybean exporter next year, and Argentina, the No. 3 shipper, need more rain and rising temperatures forecast for this week could stress crops.

* Meanwhile, concerns the euro zone debt crisis will damage global growth pushed the euro back towards 11-month lows on Monday while the safe-haven dollar got support from uncertainty after the death of North Korean leader Kim Jong-il.

* News of the death of the 69-year old ruler fuelled uncertainty about how much support his youngest son Kim Jong-un had among the ruling elite, especially in the military, and worry he might need a military show of strength to help establish his credentials.

* The weakening of the euro against the dollar has helped revive European exports in recent weeks, although competition from Black Sea producers remained tough.

* A group of Israeli private buyers has issued an international tender to purchase 30,000 tonnes of feed wheat and 30,000 tonnes of corn, European traders said on Monday. Bidding deadline was Wednesday, Dec. 21.

* The rise of US and European stocks on plans to enhance an arsenal to buoy European finances and gain tighter euro zone fiscal rules, was also supportive.

* In Germany, prices were marked up in line with the rise in Paris and in Chicago early in the Monday session but with activity starting to slow down ahead of the Christmas break.

* Standard new crop bread-quality wheat for January delivery in Hamburg was offered for sale up three euros on Friday prices at 197 euros a tonne.

* Hamburg selling prices remained around 7 to 10 euros above Paris futures as farmers retained produce in the belief 2012 supplies will be tight after Germany's disappointing 2011 wheat harvest.

* "Activities are now starting to slow down ahead of the Christmas and new year break," one German trader said. "The export outlook is a bit brighter following the fall in the euro's value but still not very bright."

* Another trader said: "Argentine wheat is likely to take the lead in the grain export tender market in the near future. Argentine wheat export prices of $220 a tonne or about $165 euros a tonne are well below levels in Germany and elsewhere in the EU."

* "We need further euro weakness to stimulate more EU sales such as achieved by France in the last Egyptian tender, but the euro remains steady at around $1.30."

* The return of water levels on the Rhine and Danube rivers was making transport easier after vessels had been sailing only partly loaded since early November, and traders were still organising shipments of delayed loads.

* Wheat prices in Italy, a major grain buyer in Europe, were little changed from the end of last week and expected to edge lower due to weak milling demand, traders said.

* "Mills are practically not buying because they have built up supplies during harvesting," one grain broker said.

* "Operators buy on the spot market and practically don't buy for months ahead because there is a lot of uncertainty about future demand and with the crisis they are beginning to have difficulties with access to liquidity," he said.

* Bread quality wheat was traded at about 202-205 euros a tonne for prompt delivery without delivery charges, in line with prices set at a key weekly session of Bologna's grain bourse last Thursday, traders said.

Copyright Reuters, 2011