EU wheat touches new contract highs, export hopes support

Thursday, 08 November 2012
By Abdul Ahad

European Wheat Futures

HAMBURG: European wheat futures rose for a sixth straight session to set new contract highs on Wednesday, supported by a sharp rise in US futures in Chicago and buying linked to hopes of brisk European exports.

* Benchmark January milling wheat in Paris closed up 3.75 euros or 1.3 percent at 275.25 euros.

* The contract earlier rose to 277.50 euros, the latest in a series of contract highs this week and a new high for a benchmark contract since early 2011.

* “We’re rising in considerable volumes,” one futures dealer said. “There are a lot of bits of bullish news plus the crop situation in South America that is putting it (South America) out of the export picture.”

* US wheat futures rallied for the third day in a row on Wednesday, jumping 1.9 percent to their highest level in more than five weeks on concerns about production shortfalls in top exporters like Argentina and Australia.

* The Paris January contract has now broken clearly out of a long-running consolidation zone below 270 euros, opening the way to next resistance levels between 280 and 290 euros, dealers said.

* Worries about rain-damaged wheat crops in Argentina reinforced demand for European wheat, with traders hedging deals on the Paris futures market, traders said.

* “The prospect of a massive global wheat market deficit in the 2012/13 season…is keeping prices high,” Commerzbank said in a report. “This is the result not least of the poor harvests in the Black Sea region. Because EU wheat in particular should profit when shipments from there dry up – as they presumably soon will – prices especially on this side of the Atlantic are picking up.”

* Port data showed a first cargo of French wheat bound for Egypt was expected at La Pallice while traders a second cargo was expected soon at Dunkirk.

* This follows a series of French sales to Egypt’s state buyer in recent weeks as competition from Black Sea exporters like Russia and Ukraine has faded.

* Exchange operator NYSE Liffe said it was considering extending trading hours for Paris grain futures in response to later publication time for US government crop reports, and was also conducting a wider review of its milling wheat contract.

* German prices were supported by the rise in Paris and US markets and improved export outlook, but trade was restrained ahead of Friday’s crop report from the US Department of Agriculture (USDA).

* Standard milling wheat for November delivery in Hamburg was offered for sale up 2 euros at 282 euros a tonne with buyers at around 280 euros, gaining 12 euros in the last week.

* “Prices were underpinned by the rise in international markets after the US presidential election and the good export outlook with the dollar strengthening and harvest problems seemingly developing in other exporters such as Australia and Argentina,” one German trader said. “Now the market is awaiting the USDA report on Friday to give a closer picture of global crops, I think there will be a restrained trading atmosphere until then.”

* Feed wheat for November-December delivery in the South Oldenburg market near the Netherlands was offered for sale up 5 euros at 278 euros with buyers at around 275 euros, also supported by expectations of good feed wheat demand in coming months as rival exporters from the Black Sea region sell out after their poor harvests this year.


Courtesy: Reuters

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