PARIS: European wheat prices were firm in late trade on Thursday after hitting a one-week high earlier in the session, supported by a large Algerian purchase and forecasts of dry and hot weather in top EU producer France from starting mid-next week.
The new-crop benchmark December milling wheat contract on Paris-based Euronext unofficially closed 0.1 percent higher at 173.25 euros a tonne in light trade. It touched 173.75 euros earlier in the day, a price unseen since May 3.
Meteo France forecast some showers in many parts of France in the next few days.
But dry and hot conditions were expected to return from the middle of next week in the EU's top wheat producer with temperatures rising significantly above average levels, raising concerns that it could cause damage in regions that have already suffered from a prolonged lack of rain.
"The return of dry weather in the northeast region where soils are barely relieved by recent rainfall will likely be problematic," a Euronext trader said.
In Chicago wheat was also firm after government forecasts for a sharp drop in US supplies next season offset pressure from large global inventories.
A large wheat purchase by Algeria, France's biggest export market, in its first tender for next season was also supportive.
The country's state grains agency is believed to have bought close to its monthly requirement of 450,000 and 500,000 tonnes of milling wheat at prices around $198-$198.50 a tonne. However, the final volume remained unclear.
In Germany cash market selling premiums in Hamburg were slightly weaker in thin demand, with sales again being transferred to the German animal feed industry which is offering higher prices than exporters and flour mills.
Standard wheat with 12 percent protein content for May delivery in Hamburg was offered for sale at 2 euros over the Paris December contract against 2.5 euros over on Wednesday, buyers were seeking 1 euro over.
Feed wheat for May delivery in Germany's South Oldenburg market was again quoted about 6 to 7 euros over Hamburg milling wheat on Thursday at around 180-181 euros a tonne.
"Feed producers seem to have a large wheat requirement following a long period of restrained hand-to-mouth purchasing," a German trader said. "So much milling wheat is going to the South Oldenburg market that it is becoming difficult to find empty trucks."
"The euro is still far away from export-friendly levels while German flour mills are not very active buyers. German flour mills also seem to be facing a lack of flour demand from bakers, which in turn is restraining their wheat purchases."
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