Euronext wheat rebounds from 1-month low, trade gloom caps gains

PARIS: Euronext milling wheat prices rose on Wednesday, recovering from a one-month low a day earlier, but gains were capped by continuing worries over international trade tensions.

Benchmark December wheat on the Paris-based Euronext exchange settled 1.75 euro, or 1.0 percent, higher at 178.00 euros ($206.28) a tonne.

The filling of a chart gap lent impetus to the rebound from Tuesday's one-month low of 174.75 euros.

"There was a bit of bargain buying and some technical momentum, but Chicago is not really giving support," a futures broker said. "It looks like Trump is going to press ahead (with trade tariffs against China), whereas there had been hope it was bluffing, so it's making the market scared."

After an earlier rebound, Chicago grain and soybean futures gave up gains as the focus remained on the threat of a trade war between Washington and Beijing, as well as favourable crop conditions in the US Midwest.

Dealers noted heavy volumes in options on Euronext wheat, amid talk some market participants had to adjust positions after price swings in the past week.

Weekly data from Euronext showed that financial investors reduced their net long position in milling wheat futures and options in the week to June 15.

In France, warm, dry weather this week, after torrential rain in the past month, was helping the winter barley harvest get under way in much of the country, although it was too soon for clear indications on yields and quality, traders said.

In Germany, cash market premiums in Hamburg were slightly weaker, undermined by the rise in Paris, but with the focus remaining on dry weather stressing crops in north and east Germany.

New crop standard bread wheat with 12 percent protein for September delivery in Hamburg was offered for sale at 3 euros over Paris December against 3.5 to 4 euros over on Tuesday.

"Rain is forecast in the driest regions between Thursday and Saturday but we will have to see how much rain actually falls." one German trader said.

"A large volume of steady rainfall is now needed to improve the condition of German wheat, a couple of showers will probably not bring much."

Dryness this summer means damage to wheat in north and east Germany is expected, although traders stress wheat in south and central Germany is developing positively.