PARIS: European milling wheat accelerated gains late on Friday, in line with a higher Chicago, amid renewed optimism euro zone leaders will find a solution to the debt crisis and as a drop in US unemployment gave evidence futures economic recovery may be gaining momentum.
* Chicago Board of Trade soft red winter wheat futures rose for a fifth day in a row to their highest level in more than two weeks early on Friday on a round of short covering, traders said.
* Kansas City Board of Trade hard red winter wheat and MGEX spring wheat also firmed despite pressure from a strong dollar and forecasts for a storm that will bring crop-boosting moisture to the US Plains this weekend.
* Paris' January contract gained 2 euros or 1.1 percent to 181.25 euros by 1815 GMT, looking set to end the week only marginally higher than it started it but after prices fell as low as 178 euros earlier in the day.
* Traders said sentiment remained fragile, and the outcome of a European summit that will review Franco-German plans for tougher governance in the bloc next week will again overshadow the agricultural commodity market's fundamentals.
* German Chancellor Angela Merkel reiterated her strong support for the euro, and called for rapid European Union treaty changes to remedy the root causes of the euro zone's debt crisis. But she warned that Europeans faced a long, hard "marathon" to restore lost credibility.
* Late on Thursday, French President Nicolas Sarkozy called for a new treaty incorporating tougher budget discipline, a European Monetary Fund to support countries in difficulty and decisions in the euro area taken by majority vote instead of unanimity.
* Investors were also reassured after the new president of the European Central Bank Mario Draghi signalled on Thursday it is ready to take fresh steps to tackle the euro zone debt crisis, saying risks to the economy have grown.
* The market's apparent inability to come back within reach of, and break above 183 euros a tonne was a bearish signal, said chartist Virginie Ciesla-Maudet at Assertis.
* "As long as supply fundamentals remain ample, global economic tensions remain in place and adverse meteorological events do not have a material impact on current crops, there appears to be little scope to see wheat prices recovering significantly over the short term," Natixis analysts said in a research note.
* Traders said the French market was entering a quieter period with general assembly meetings being held in many cooperatives and little interest on the cash market ahead of the Christmas break.
* Also helping European grain markets was a new fall of the euro against the dollar below $1.34, as the market continued to unwind long positions in the single currency ahead of key events next week.
* Ukraine's Agriculture Ministry scaled down its 2011/12 grain exports forecast to 23-25 million tonnes from a previous outlook of 27 million tonnes as farmers released less wheat than expected in anticipation of a poor crop next year.
* Separately data from the farm ministry showed a fall in the 2012 winter wheat harvest could force Ukrain to import wheat in 2012/13, maybe up to 1.3 million tonnes, for the first time since 2004.
* European rapeseed futures were also higher with front month February up 1.25 euro, or 0.3 percent, to 414.50 euros a tonne, after trimming gains as oil fell below $109 a barrel.
BRITAIN
* Feed wheat futures in London were slightly higher, buoyed by gains in both Paris and Chicago with grain markets finally beginning to find support after a prolonged downtrend.
* May feed wheat rose 1.35 pounds or 0.9 percent to 146.50 pounds a tonne. The contract is on track to end the week with a modest gain of 2.00 pounds or 1.4 percent, ending a run of four consecutive weekly losses.
* "Markets have stabilised this week with improved short-term demand, raising spot premiums," UK merchant Gleadell said in a market update on Friday.
* Dealers noted, however, competition from major Southern Hemisphere producers was expected to intensify over the coming weeks.
* "Long-term fundamentals remain bearish, as increased supplies from Argentina and Australia will soon be on the market competing with Black Sea and EU supplies," Gleadell added.
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