European wheat hit a more than 1-1/2 year high on Thursday, boosted by strong exports and dryness in some parts of Europe, but pared most of its gains after the US government released larger than expected wheat ending stocks estimates.
Benchmark May milling wheat on Paris-based Euronext, settled at 198.00 euros a tonne, up 0.4%. It had earlier hit 199.50 euros, a price not seen since mid-August 2018 and a rise of 30 euros or 13% from a month earlier.
"The rise seems to be open-ended. We are just off 200 euros now. The real question is whether the strong export rhythm is sufficient to justify this. Some people seem to think so," one trader said.
"People are also keeping a close eye on the state of the crops in central and eastern Europe which need water." A dry spell across Europe is starting to raise concern about stress for wheat crops recovering from a rain-disrupted sowing season that put the region on course for a smaller harvest.
The USDA in its April supply and demand estimates (WASDE) pegged world wheat end stocks above analyst forecasts and US stocks in the high range of estimates. In Germany, cash premiums in Hamburg followed the strength in Paris, supported by brisk exports.
Standard bread wheat with 12% protein for May delivery in Hamburg was offered for sale at around 6 euros over the Paris May contract against 5.5 euros over on Wednesday. Buyers were offering around 5 euros over Paris.
"Loading of wheat for export in Germany remains very active and I think April will be one of Germany's busiest ever months for wheat exports," one German trader said.
"Expectations are that Germany's high level of export shipments will continue at least to mid-May."
Firm Black Sea prices are likely to transfer more export demand to the west EU and Baltic region in the spring, he said. But German and other Baltic Sea area export supplies are looking tight after large export shipments in past months. "France looks well placed to gain new export sales," he said.
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