European wheat futures rose to a two-week high on Thursday as a sharp fall of the euro against the dollar revived hopes of export deals. March milling wheat on Paris-based Euronext, was 1.2 percent higher by 1700 GMT to 168.00 euros a tonne while CME Group's March EU wheat contract was up 0.7 percent to 174.50 euros a tonne.
The US dollar surged to its highest level in 14 years against a basket of major currencies on Thursday on anticipation of a more hawkish Federal Reserve the day after it raised interest rates for the first time in a year. "The boost clearly came from the Fed decision and its consequences on the euro/dollar (rate) and hopes to see European wheat be part of Algeria's wheat purchase," a Euronext trader said.
A fall of the euro against the dollar makes euro-denominated products more attractive on the world market. European traders said Germany and France were believed to be part of Algeria's 490,000 tonnes of optional-origin wheat purchase in a tender that closed on Wednesday. This would be good news for France, which has harvested a very poor crop this year after adverse weather and saw shipments to its top export client slump so far this season.
German cash market premiums in Hamburg were stable, also underpinned by the export-boosting weaker trend in the euro. Standard wheat with 12 percent protein content for January delivery in Hamburg was offered for sale unchanged at 4 euros over the Paris March contract. Buyers were seeking 3 euros over. "The euro's weakness is good news at a time that Argentine wheat is being offered at very low prices in export markets," one German trader said.
"Overall activity is starting to run down as people do not want to have risky positions over the Christmas and New Year holiday period." Shallow water in the Rhine and Danube rivers is hindering inland cargo shipping and this could generate some pre-Christmas short-covering by mills, he said.
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