Euronext wheat rises to one week high

Euronext wheat rose to a one-week high on Wednesday, buoyed by a surge in US futures amid concerns about dry weather in Russia and other major production zones worldwide. However, gains on Euronext were limited by a sharp rise in the euro against the dollar, which underscored the competitive disadvantage of western European wheat versus Black Sea origins.
December milling wheat, the most active contract on the Paris-based Euronext exchange, was up 0.50 euro, or 0.3 percent, at 186.25 euros ($219.25) a tonne at 1609 GMT. It earlier climbed to 188.25 euros, its highest since May 29, to approach last week's 10-month top of 190.50 euros, with technical momentum fuelled by the filling of a chart gap.
But a rebound in the euro to a near two-week high just shy of $1.18 curbed Euronext prices. Weather forecasts showed little rain in the coming days for dry parts of southern Russia, a major export region, while concern was also building about parched conditions in northern Europe. Weather uncertainty was reinforced by continuing storms in France. Traders said repeated downpours were raising the risk of crop disease that could affect harvest quality, but it was too early predict the impact.
In Germany, the focus remained on dryness stressing crops in northern and eastern export regions. "It is now pretty certain that dryness is going to reduce the wheat harvest in north Germany but crops in central and south Germany are all right," a German trader said. "The question will now be whether export supplies will be limited in the new season."
The association of German farm cooperatives on Wednesday cut its forecast for Germany's 2018 wheat crop to 22.89 million tonnes, down 1 million tonnes from its May outlook. "It is not only crops in Germany which are suffering from the dryness, but also in other areas of the Baltic Sea region such as Denmark, south Sweden and Poland," the association said.
Standard bread wheat with 12 percent protein content for June delivery in Hamburg was offered for sale unchanged at 8 euros under Paris December. Attention was turning to new crop, with September delivery in Hamburg offered at level Paris December. Non-commercial market participants reduced their net long position in Euronext's wheat derivatives in the week to June 1, data published by the exchange showed. In separate data, Euronext reported that average daily volumes for its commodity futures and options, mostly milling wheat, reached 63,501 contracts in May, up 6.6 percent from the previous month and up 81.6 percent compared to May 2017.