European wheat futures hit 10-day high

European wheat futures hit a 10-day high on Friday, buoyed by a continuing rally in US wheat, which more than offset a strong euro and improving crop weather in western Europe. December milling wheat on Paris-based Euronext ended 3.25 euros, or 1.82 percent, higher at 181.75 euros a tonne after peaking at 183 euros its strongest since June 20. "The wheat market is glued to the US weather and investment funds are busy buying," one Euronext dealer said. "We followed along and matched last week's top of 183 euros."
US prices extended recent gains on Friday, led by spring wheat, as the US Department of Agriculture lowered its estimate for spring wheat plantings. Spring wheat prices have risen sharply this month, also supported by fears of output losses in key growing areas of the United States. "If the harvest damage to the US spring wheat crop is confirmed, there could be a transfer of export demand for high-protein wheat grades to Europe," one German trader said.
"The quality of the harvest in Germany and other Baltic Sea countries which produce the highest-protein grades will be critical." Traders said the run-up in futures encouraged a subdued mood on the French cash market, with traders waiting for harvesting to get into full swing before assessing supply prospects for the coming season. "With the futures market heated up, people are waiting for things to calm down. There's not much activity," one physical broker said.
The condition of French soft wheat deteriorated last week while harvesting got off to an early start, data from farming agency FranceAgriMer showed on Friday, reflecting the impact of a heatwave in the European Union's top grain grower. At EU level, the European Commission cut its estimate of soft wheat production in the bloc by more than 2 million tonnes to 138.9 million tonnes, citing the impact of the heatwave.
German cash premiums for high-protein wheat in Hamburg were pushed up by the dramatic rise in US spring wheat prices, but standard grades remained depressed by a positive harvest outlook in Germany. The highest-quality E grade wheat with 14 percent protein content was offered for September delivery in Hamburg at a premium of 20 euros over the Paris December contract, against 19 euros over on Thursday.
This was way above new-crop standard wheat with 12 percent protein content, offered for sale at 2 euros under the Paris December contract for September delivery in Hamburg against 1.5 euros under on Thursday.