EU wheat rallies with Chicago on talk of Russian export curbs

PARIS: Euronext wheat climbed with Chicago on Thursday, supported by signs that Russia is considering export restrictions, but closed below session highs as a widely watched US government crop report was broadly in line with market expectations.

March milling wheat, the most active contract on the Paris-based Euronext exchange, settled up 2.00 euros, or 1.0%, at 204.75 euros ($248.01) a tonne.

It earlier rose to 206.50 euros, its highest since Dec. 1, as it extended a rebound from a two-month low on Monday.

Russian Prime Minister Mikhail Mishustin said the country would prepare measures to stabilise domestic food prices, and sources told Reuters the government is considering a grain export quota and wheat export tax.

The prospect of Russia, the world's largest wheat exporter, slowing shipments created expectations of additional demand for European Union supplies, although the EU's export surplus is dwindling after strong recent shipments.

"With export shipments from Germany expected to remain strong in January there is interest in whether Russia will decide to tax wheat exports as this could create new sales opportunities for us," a German trader said.

"Even a moderate Russian export tax or export quota could generate uncertainty about Russian export deliveries and push more business to other exporters like the EU."

Standard bread wheat with 12% protein for January delivery in Hamburg was offered for sale at around 5.0 euros over Paris March against 5.5 euros over on Monday with buyers seeking around 4 to 4.5 euros over.

In France, farm office FranceAgriMer increased its forecast for 2020/21 French soft wheat exports outside the European Union for the third month in a row to 6.95 million tonnes, but noted limited further upside given a reduced harvest surplus this season.

The US Department of Agriculture's world supply and demand report, released shortly before the end of the Euronext session, failed to provide further impetus for grain markets, with South American harvest projections notably close to market expectations.