Paris wheat hits 7-1/2 year high on Russian export tax reports

HAMBURG: European wheat futures rose on Tuesday to 7-1/2 year highs as an aborted import tender by Egypt highlighted uncertainty created by reports that Russia plans higher than expected wheat export taxes.

March milling wheat on Paris-based Euronext was up 3.75 euros, or 1.7%, at 221.75 euros ($269.45) a tonne by 1419 GMT.

It earlier climbed to 223.25 euros, a life-of-contract peak and highest front-month price since May 2013.

Russia will consider changes to its wheat export tax by the end of this week, its economy ministry said on Tuesday, a day after sources said the leading exporter is looking at increasing the tax to 50 euros ($60.78) per tonne, rather than the previously planned 25 euros ($30).

"The potential increase in the Russian tax is predictably preventing wheat from easing off," one futures dealer said. "Plus you have Egypt coming out at the same moment for a tender."

Egypt's state grain buyer GASC on Tuesday cancelled an international tender to buy wheat after receiving an unusually low number of offers.

Forecasts for colder weather in the coming days in Russia and Ukraine also revived concern about crop conditions in the Black Sea export region.

Grain markets are also awaiting world supply and demand forecasts from the US Department of Agriculture (USDA), notably as a gauge of US and South American supplies of corn and soybeans. The numbers are due for release at 1700 GMT.

In Germany, traders were also hoping that Russian wheat export taxes will push sales towards western Europe.

"The reports about higher export taxes in Russia seem to be creating great uncertainty among Russian exporters, which must be positive for EU export prospects," one German trader said.

Standard milling wheat with 12% protein for January delivery in Hamburg was offered for sale at about 4 euros over Paris March.