PARIS: European wheat futures rose for a third straight session on Friday to approach a seven-month high as worries about a hardening conflict in the Middle East prompted some short-covering before the weekend, traders said.
May milling wheat on Euronext settled 0.6percent higher at 210.50 euros (USD240.85) a metric ton. The benchmark contract earlier climbed to 211.50 euros, nearing Monday’s peak of 212.50 euros. Wheat continued to take its cue from fluctuating oil prices, with Brent crude edging above USD100 as investors wrestled with supply disruption from the two-week-old US-Israeli war with Iran.
Iran’s new Supreme Leader Ayatollah Mojtaba Khamenei said on Thursday Iran would fight on and keep the Strait of Hormuz shut. Chicago wheat also rose for a third day.
“It’s fear, like every Friday,” a futures dealer said of the end-of-week strength in wheat that has been a trend during the Iran crisis. Wheat is being influenced by oil because of commodity investment flows linked to the conflict and as other crops like corn are widely used in biofuel.
A fall in the euro, which hit a seven-month low against the dollar below USD1.15, also lent support to Euronext. The weaker euro was helping make French wheat more competitive in the major Egyptian import market, though the Middle East war was clouding overall demand prospects.
“Export demand for wheat is thin with buyers waiting on the sidelines, hoping for some form of truce in the Iranian fighting which would bring crude oil prices down,” one German trader said.
“An exception is Egypt, where buyers continue to seek supplies.” An Egyptian buyer was seeking about 50,000 tons of Black Sea 12.5percent protein wheat at about USD258 a ton c&f Egypt for April/May shipment, he said. A rise in Russian prices was reducing the advantage over other origins.
In the 11.5percent protein segment, Russian wheat was still cheapest for Egypt including shipping costs, at around USD254 a ton cost and freight (c&f) for April shipment. That compared with Ukrainian and Romanian both at around USD256 a ton c&f, with French around USD258 depending on currency and Euronext moves.
In France, crop ratings for soft wheat were unchanged last week while spring barley sowing progress surged ahead, according to farm office FranceAgriMer, suggesting a dry, warm start to March boosted field conditions after heavy rain last month.
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