EU wheat at three-month high in the wake wet US weather

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Stock image

Valerie Parent

European wheat prices hit a three-month high on Monday in the wake of a surge in Chicago in the previous session on concerns that wet weather in the United States could damage crop quality.

U.S. grains markets were closed on Monday for the Memorial Day holiday.

Benchmark September milling wheat on Paris-based Euronext was 1.8pc higher by 1451 GMT to €181.25 a tonne after touching €182.00 in earlier trade, a price unseen since Feb. 15.

The contract recorded a 1.50 euro gap at the open.

However, the large jump will need to be confirmed after the open in Chicago on Tuesday, traders said.

Front-month wheat on the Chicago Board of Trade surged more than 4pc on Friday on short-covering and technical buying against a backdrop of concerns about rain-damaged winter crops and stalled spring wheat seeding due to rains.

"The hesitation is big between those who think that a looming heavy situation on Black Sea wheat is such that it will take everything in its path, and those who think that the U.S. weather... can cause a major reversal of the situation," consultancy Agritel said in a note.

Above-normal rainfall is expected across most of the Midwest and Plains farm belt over the next 15 days, further delaying planting of corn and soybeans and potentially damaging the quality of the developing winter wheat crop, forecasters said.

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On the French cash market, activity was at a standstill as buyers were cautious in the face of the sharp rise and sellers wanted to hold off in hope of better prices.

In Germany, cash premiums in Hamburg slipped in thin demand as buyers declined to accept rises in Paris prices.

Standard bread wheat with 12pc protein for September onwards delivery in Hamburg was offered for sale at €1.5 under Paris December, against €1 under on Friday. Buyers were seeking at least €2.5 under.

"Germany has had a lot of rain over the past week or so which has greatly improved harvest expectations after the very dry start to the spring," one German trader said.

"The picture is looking much better and there is growing confidence that we will achieve a good crop if there are normal weather patterns up to the harvest."

"Against this background, some buyers cannot see enough reason to accept price increases caused by the rise in Paris futures."

Reuters


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