Euronext wheat futures continued to rally on Monday, with prices reaching their highest in more than two weeks as the market weighed an unexpectedly low French crop forecast that has heightened concern about a weather-reduced EU harvest. December milling wheat, the most active position on Paris-based Euronext, rose as much as 4.25 euros, or 2.3 percent, to 186 euros ($215.82) a tonne, its highest level since June 13.
By 1557 GMT it was up 0.75 euros, or 0.4 percent, at 182.50 euros as a sharp pullback in Chicago futures led the European market to trim gains. The focus remained a 4.6 million tonne cut by analyst firm Strategie Grains to its forecast for the French harvest, which had triggered the rally on Friday.
Confirming the estimate contained in a client update on Friday, Strategie Grains said on Monday that a field tour last week had shown problems with crop density and grain development, thought to be linked to heavy rain in winter and late spring. The estimate rattled some traders, coming on top of deteriorating crop conditions in Germany and other parts of northern Europe.
Some market participants remained sceptical, given generally decent crop conditions reported so far, but others said it could herald more downgrades to the French harvest. "The first talk we've heard about early wheat harvesting in France sounds rather disappointing. So the crop could start trending towards the level in the estimate, especially with the very hot weather at moment," one futures dealer said.
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