HAMBURG: Euronext front-month wheat on Monday remained close to the 7-1/2 year highs hit on Friday, as concern about tightening supplies and strong demand continued to fuel a global rally on wheat markets. March milling wheat on the Paris-based Euronext exchange was up 0.4%, or 1.0 euro, at 239.75 euros ($291.0) a tonne at 1624 GMT.

The contract earlier on Monday hit 241.75 euros, close to Friday’s peak of 242.75 euros a tonne, the highest front-month price since May 2013. Euronext had also hit its highest in over seven years in January, supported by strong international demand driven by China and concern over declining wheat stocks in Europe.

“The feeling is that demand should continue to remain solid following Russia’s grain export taxes,” a trader said.

“But there is a feeling prices cannot rise too high or EU wheat will become too expensive to win markets.”

In Germany, export optimism continued to keep premiums in Hamburg well over Euronext futures.

Standard bread wheat with 12% protein for March delivery in Hamburg was offered for sale at around 9.5 euros over Paris May against 9 euros over on Friday.

“Russia’s wheat export taxes are expected to transfer export sales to the EU,” one German trader said. “But I think it is more a case of optimism rather than actual new sales currently supporting the market.”

Traders in Germany, traditionally a big exporter to Saudi Arabia, noted the kingdom’s purchase of 355,000 tonnes of wheat from Saudi-owned farms in Australia, Canada and Ukraine. “This is quite a substantial volume and raises the question of whether Saudi Arabia will buy less in import tenders,” the trader added.