European wheat prices jumped to six-month highs on Thursday, supported by a rally on US markets, concern about global supplies and brisk export demand. Benchmark March milling wheat on Paris-based Euronext was up 1.75 euro or 0.9% by 1553 GMT at 190.50 euros a tonne, its highest level since June 28 last year.
In Chicago, the most actively traded CBOT wheat contract was 1.2% higher at $5.65 per bushel after hitting $5.67-1/2 per bushel, its highest price since August 2018.
Euronext prices were supported on the supply side by adverse weather conditions in export rivals including Russia, Ukraine and Australia. Moisture reserves in the soil remain low for winter grain sowings in Russia, the world's largest wheat exporter, after a dry December, and rains will be badly needed once the winter is over, SovEcon said last week.
In Ukraine, expected adverse weather across the country may significantly damage winter grain crops, especially those that were sown late while the Australian wheat crop was hurt by an unrelenting drought across the country's east coast. On the demand side, Morocco's decision to suspend customs duty on soft wheat from Jan. 2 to April 30 to ensure a regular supply and avert price hikes on the domestic market was also supportive.
"With a tight supply and demand outlook, speculators are coming back on the market," a trader said, also pointing to an expected drop in next year's harvest in France due to late sowings. He added that wheat prices were supported by technical elements with the March contract now above 190 euros. Focus would be on US-China trade talks after an initial deal that could boost agricultural exports out of the United States coontinued to help prices rally US President Donald Trump said on Tuesday that Phase 1 of a trade deal with China would be signed on Jan.