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Markets Print edition: 2019-12-31

Euronext wheat rises to six months high

Published Updated

Euronext wheat futures rose to six months high on Friday, tracking a rally in Chicago as technical momentum and export demand buoyed wheat markets.

A sharp rise in the euro, which reached a two-week high against the dollar, curbed gains on Euronext.

March milling wheat, the most active contract on the Paris-based exchange, was up 1.50 euros, or 0.8%, at 188.75 euros ($210.85) a tonne by 1624 GMT.

It earlier climbed to 189.25 euros, its highest since June 28, as it surpassed a five-month peak reached on Tuesday.

Euronext resumed trading on Friday after being closed since early afternoon on Tuesday for the Christmas holiday.

The European market adjusted to gains in Chicago, which rose on Thursday and then extended gains on Friday to break above the $5.50 psychological threshold.

"The US market has rallied on technical factors, as well as the context of the US-Chinese trade deal," a futures dealer said.

"But the 15 cent gain we've had in Chicago is a bit surprising."

A first-stage agreement between Washington and Beijing to defuse a bitter trade dispute has boosted sentiment on grain markets as it calls for China to raise purchases of US agricultural goods.

The possibility of increased Chinese imports of US wheat has added to a picture of brisk international demand.

Iran has bought around 1 million tonnes wheat in recent weeks, according to traders, while Morocco is expected to step up its import campaign after the authorities suspended tariffs on milling wheat.

Estimates calling for a decline in wheat area for the 2020 harvest in parts of Europe were also underpinning wheat prices.

In western Europe, forecasters are expecting a sharp decrease in area in top producers France, Germany and Britain.

In Ukraine, the country's official statistics office on Friday estimated the winter wheat area would be down 0.6%, although private consultancy APK-Inform has projected a fall of nearly 10% due to drought.

Traders were also monitoring strikes against pension reform in France which were continuing to hamper rail transport services, although stoppages at ports have eased this week.

Rapeseed futures on Euronext also rose in step with a broad rally in oilseed markets, fuelled by optimism over the conclusion of the US-Chinese trade deal and a steep rise in palm oil prices.

February rapeseed on Euronext added as much as 4.25 euros, or 1%, to a new contract high of 413.25 euros a tonne, which also marked a new high for a spot price since the end of April 2017.

Copyright Reuters, 2019

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