PARIS: European wheat futures reached new highs on Wednesday in the wake of a rally on US grain markets where funds increased their long positions in all products, still buoyed by concern of crop damage from adverse weather globally.
Benchmark December milling wheat on Paris-based Euronext, was up 0.4% by 1541 GMT to 200.75 euros a tonne after hitting a life-of-contract high and the highest spot price in nearly five months.
By the same time, most active wheat on the Chicago Board of Trade (CBOT) was up 2.3% at $6.05 a bushel.
"The market seems to hold the important resistance level of 200 euros/tonne, supported mainly by Chicago where funds are repositioning themselves," a trader said.
Concern of adverse crop weather globally continued to buoy prices.
"The much-awaited rains came to Ukraine, but it's still very dry in Russia with a risk premium for the next campaign supporting prices," French consultancy Agritel said, also pointing to water deficit on the whole South American continent.
It noted that the return of rains in Western Europe was relieving producers.
In Germany, export optimism continued following brisk export loadings including large shipments for Algeria.
"Sellers are waiting to see if Euronext breaks firmly above the 200 euro level and so are not in a hurry to deal quickly in case they miss even higher prices," one German trader said.
"Consumers are unconvinced about serious dryness problems in the Black Sea region, with one burst of sustained rain likely to solve a lot of problems there."
Suppliers turned to Germany and elsewhere in the Baltic region to replace French supplies, a pattern seen in recent months after France's poor crop this summer.
"Three ships have already been loading a total of just over 115,000 tonnes of wheat in Germany for Algeria so far in October while another ship is due to take on 30,000 tonnes this week," another trader said.