PARIS: European wheat prices rose more than 1% to hit a five-week on Thursday, supported by a rally in Chicago, technical buying and short-covering as bullish sentiment is mounting, traders said. Benchmark December milling wheat on Paris-based Euronext was up 1.2% by 1548 GMT to 186.25 euros a tonne, a price unseen since July 24.
"There is not much bearish news," a trader said. "We have good demand from China, uncertainty about crops in the southern hemisphere, and prices in the US are rallying." Brokers noted heavy demand from industry players on the cash market with many farmers still refraining from selling.
In Germany, strong domestic demand helped compensate for lower prices offered in export markets by rival export countries in the Baltic Sea region. "The Baltic States including Lithuania had excellent wheat harvests this summer and are exporting strongly, offering prices for 12.5% protein wheat about 9 euros a tonne lower than Germany," one German trader said. "But domestic demand in Germany remains strong."
Traders said this week mills bought several hundred thousand tonnes of new crop wheat in Germany for a range of delivery dates in August to December 2020 in the past couple of weeks. "The poor harvest in France this summer means French trading houses continue to seek wheat meeting Algerian standards in Germany, Poland and the Baltic States," the trader added. "It looks like a lot of Algeria's wheat imports this season will be met by non-French suppliers in north Europe."
Algeria is France's largest wheat export customer. The International Grains Council (IGC) on Thursday raised its forecast for 2020/21 world wheat production by 1 million tonnes to 763 million tonnes.
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