European wheat hits three-week high on weaker euro

European wheat futures in Paris rose to a three-week high on Tuesday, supported by the export-boosting weakening of the euro against the dollar, but later gave up most gains as US futures turned lower. May milling wheat on the Paris-based Euronext exchange was up 0.25 euro, or 0.1 percent, at 162.50 euros ($200.57) a tonne at 1637 GMT.
The contract earlier on Tuesday climbed to 163.50 euros, a price last reached on January 30, but failed to breach chart resistance near that level. "The euro is proving to be the main support for Euronext," one futures dealer said. "From a weather point of view, crop concerns are not enough to drive the market."
The euro dropped to around $1.23 against the dollar, pulling further away from last week's three-year high above $1.25. Traders were monitoring weather forecasts calling for a cold spell in Europe from the middle of the week, although frosts were not expected to be severe enough to threaten crops in major French crop belts.
Wheat markets were also being underpinned by concern over dry conditions in the US Plains as well as rising prices in top wheat exporter Russia, although a backdrop of large global supplies continued to weigh on sentiment. Traders were awaiting the outcome of an international purchase tender held on Tuesday by Algeria. The North African country is the biggest buyer of French wheat but Argentine wheat has increased its presence there this season.
In Germany, wheat cash market premiums in Hamburg were little changed in thin demand. Standard bread wheat with 12 percent protein content for February delivery in Hamburg was offered for sale unchanged at around 5.5 euros over Paris March.
"German exports remain weak and a substantial break downwards by the euro against the dollar would be needed to stimulate sales," one German trader said. "The euro weakness is very welcome but more is needed." "Domestic feed wheat prices remain higher than milling wheat largely because of weak exports in my view. Attention is now turning to forecasts of very low temperatures next week which could be a concern if there is not enough snow cover."