PARIS: Euronext wheat rose for a second session on Wednesday to a one-month peak as the breaching of chart resistance and weather concerns in Northern Hemisphere production belts fuelled more short-covering after recent price lows.
Benchmark September milling wheat on Paris-based Euronext was up 1.6% at 212.25 euros a metric ton by 1557 GMT. It earlier reached 212.75 euros, its highest since April 17 as it moved further away from a contract low of 201.00 euros struck last week.
Chicago wheat also rallied for a second day to continue its recovery from a five-year low last week.
Investment funds have built up large short positions in wheat futures amid ample global supplies and tepid import demand, making the market prone to bouts of short-covering. Data on Wednesday showed that financial participants had extended their short position in Euronext wheat last week.
“It’s technical short-covering essentially but that’s prompting everyone to cover positions,” a futures dealer said. Headlines about harsh weather in China and Russia had encouraged the short-covering flurry, though traders cautioned there was little evidence of significant damage to wheat crops.
There has also been background concern about low rainfall this spring in Northern Europe, though showers forecast this week were expected to ease the strain on crops.
Rain spread to parts of northern France on Wednesday after storms in the south earlier this week, though very dry plains in the far north were not expected to get precipitation until at least the weekend. The rally on Euronext, together with another rise in the euro against the dollar, tempered hopes for late-season export sales for Western European wheat after the recent price lows.
Tenders held by Algeria and Saudi Arabia in the past week have also dampened export sentiment by suggesting ample supplies of Black Sea wheat for the season that starts in July.
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