Wheat prices in western European markets were higher on Friday buoyed by the weakness of the euro and a bounce in US futures after the prior session's steep losses. "We're rising a bit because Chicago is in positive territory and the euro-dollar rate is helping us," a French futures dealer said.
The euro hit 16-month lows against a robust dollar on Friday with growing unease about funding pressures in the euro zone and an improving US economic outlook pointing to further gains for the greenback at the expense of the common currency. The most active March milling wheat contract on the Paris-based futures market was up 2.00 euros or 1.03 percent at 195.50 euros a tonne by 1307 GMT.
The rise came after two straight falling sessions that had in turn broken a 13-session rally that saw the benchmark contract add about 15 percent and hit 3-1/2 month highs. Traders were awaiting the results of a latest tender by the state buyer in Egypt, the world's top wheat importer. The recent slide in the euro has boosted the chances of French wheat after it saw a first sale to GASC in months in the previous tender.
The recent rally was fuelled by oversold technical signals and growing worries about hot, dry weather in Argentina. The market is now waiting to see if rain forecast for next week will fall in key growing belts in Argentina and to what extent the US government cuts its outlook for the Argentina corn crop in its monthly world crop estimates.
"The weather in South America is a concern, and it will be watched with interest how the USDA reflects this weather phenomenon in their January report next week," Jonathan Lane, trading manager with UK merchant Gleadell, said in a market note. "Analysts will be expecting a reduction in both Brazilian and Argentine corn and soybean crops," he added.