AMSTERDAM: European wheat prices were mixed in afternoon trade on Tuesday, with the front month buoyed by the close of options on the contract on Wednesday and other contracts little changed to slightly lower as a fall on US markets balanced good prospects for export demand, traders said.
March milling wheat on the Paris-based futures market was up 3.5 euros or 1.81 percent at 210.50 euros ($280) a tonne by 1643 GMT, but later contracts were stable to slightly lower, with May unchanged at 204.25 euros a tonne.
Traders noted that the spread between the two front-month contracts widened sharply on Tuesday to 4.50 euros after closing at 2.25 the previous day.
Wheat and corn futures on the Chicago Board of Trade fell on a stronger US dollar, a record-large wheat forecast from Australia and some profit-taking after Monday's higher close, traders said.
"The market is looking for a trend," a trader said, noting that higher crop forecasts for Australia were not bearish in Europe. "Australia has a better (than forecast) crop, but it is not a competitor for us," he added.
"With Morocco, Algeria and West Africa, we have enough exports for our balance," a French trader said.
Australia on Tuesday lifted its forecast for wheat production this year by 4.2 percent to a record 29.5 million tonnes, saying key growing regions had completed harvesting before the onset of heavy rains.
The forecast, which adds to the amply supplied global market, is more than the 28.3 million tonnes estimated by the US Department of Agriculture in its monthly global demand and supply report last week.
US Agriculture Department estimated US wheat plantings for the 2012/13 crop year at 56.5 million acres in its annual baseline projections. A year ago, US farmers seeded 54.4 million acres of wheat.
Algeria's state agency OAIC is tendering to buy a nominal 50,000 tonnes of optional-origin durum for April shipment, European traders said on Tuesday.
On the maize cash market, brokers noted good demand from animal feed makers, notably in Spain, thanks to better competitiveness against feed wheat.
German wheat was supported by the strength in Paris but with a weakening factor provided by forecasts of warmer temperatures.
Standard quality milling wheat for March delivery in Hamburg was offered for sale up 1 euro on late Monday levels, at 211 euros a tonne with buyers at around 209 euros.
"Buyers are not satisfied with the fall in prices at the start of this week and were unwilling to deal," one German trader said. "The weather is returning to more usual winter temperatures after the cold snap and reducing fears of frost damage."
A return to generally single-digit frosts with daytime temperatures above freezing point are forecast from Tuesday to Saturday in Germany following weeks of double-digit frosts.
The deep frosts have caused some canals and rivers to freeze including the Danube, although the Rhine and ocean ports are functioning normally.
"The freeze-up has only caused minor supply disruption so far," another trader said. "Many mills seem to have relatively good supply cover."
Strong demand from makers of animal feed kept German feed wheat prices close to milling wheat in parts of the country, a pattern seen in past weeks.
Feed wheat for nearby delivery in the South Oldenburg market near the Netherlands was offered for sale at 212 euros a tonne, with buyers at around 210 euros and trade reported at 210.50 euros.
Dutch and Belgian feed wheat prices were 6 euros per tonne down from last week, traders said.
Dutch feed wheat for deliveries in April, May and June were quoted at 208 euros a tonne, while new crop for September-to-December deliveries was quoted at 190 euros a tonne.
In Belgium, March contracts traded at 208 euros a tonne, while new crop for August-through-December deliveries by truck was quoted at 190 euros a tonne.
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