EU wheat rises in tandem with Russian, Argentine prices

PARIS: European wheat edged higher on Monday, supported by a rise on US markets and firm prices in Russia and Argentina, but failed to surpass a two-month high hit on Friday.

Benchmark March milling wheat on Paris-based Euronext settled 0.2 percent higher at 207.25 euros a tonne after hitting 208.25 euros in earlier trade.

That was below the 208.50 euros hit on Friday, which marked the highest prices since Oct. 16.

EU wheat has been supported by rising prices in Russia that have lent weight to expectations the world's largest wheat supplier is losing competitiveness after exports set a record pace in the early part of the 2018/19 season.

In addition, European traders have become less concerned about competition from Argentina in north African markets, given rising Argentine prices.

"French wheat is slowly regaining some competitiveness on the export market although there is a strong resistance at between 207.50 and 210 euros a tonne on March 2019 (Euronext contract)," consultancy Agritel said in a weekly note.

Ahead of next season's harvest, the EU's crop monitoring service said on Monday winter cereals were underdeveloped in large areas of Europe due to delayed sowing and below optimal soil moisture conditions.

"The current situation is delicate, because underdeveloped crops with reduced frost tolerance are more susceptible to cold air intrusion, which could cause considerable frost damage in areas without snow cover deep enough to provide thermal insulation," it said in a monthly report.

Still, MARS expected a forecast drop in temperature would help winter hardening increase in central, northern and eastern Europe. No frost kill was expected until the end of the forecast period on Dec. 20, it added.