Wheat prices in western Europe were higher on Wednesday, supported by gains in Chicago and concern about winter damage to some European crops. The most active May milling wheat contract in Paris was up 2.25 euros or 1.09 percent at 208.00 euros a tonne by 1257 GMT. A sizeable uptake of loans in the ECB's second-ever offering of three-year funding also lifted equity and commodity markets as investors anticipated more liquidity.
Chicago wheat futures were firm, notching up a new three-week high as prices continued to benefit from buying from funds that have been short on the market and spillover support from a five-month high for soybeans.
"At the moment the soybean rally is pushing up grains because people don't want them to lose area to soy in the United States," a French futures broker said. "In Europe, there is a sort of general concern about the new crop," he added. "In France we're still trying to measure the impact of the recent freezing spell."
Concern about crop damage centred on eastern France, Germany and Poland. "Many fields seem to have been impacted but it is still necessary to wait for more precise estimations of crop damage," analyst Agritel said in a market note on Wednesday. Operators said French farmers were reporting some winter damage to the country's main soft wheat crop, whereas previously concerns had centred on durum and barley plants. Wheat prices were also underpinned by sustained export demand, with port activity in France picking up following a spate of reported sales to importers like Algeria.
Talk that Iran was considering importing 3 million tonnes of wheat from India, as it works against the impact of Western sanctions, continued to be mentioned by traders, although bullish impact on the market could be limited as India would not normally release such export volumes. May feed wheat in London rose 1.00 pound to 168.00 pounds a tonne.
"With all the focus currently on the old-crop tight supply issues, it is still worth remembering that current estimates point to increases in grain and oilseed plantings around the world for harvest 2012/13," Britain's Home-Grown Cereals Authority said on Wednesday. "Spring weather will be critical to assess whether or not the increase in area will translate into an increase in production," HGCA said in a market note. European rapeseed futures were also higher in step with soybeans. May rapeseed was up 1.25 euros or 0.27 percent at 457.75 euros a tonne, close to an 8-1/2 month high for the contract seen last week.
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