October 05, 2013
European wheat futures rallied on Thursday to a two and a half month high, driven by bullish chart signals and a tightening global supply outlook. The supportive technical and fundamental factors led the market to shrug off an eight-month high for the euro against the dollar, which would make wheat from the euro zone more expensive for export.
November milling wheat on the Paris Euronext market was up 3.00 euros or 1.6 percent at 195.75 euros a tonne by 1404 GMT. It earlier rose to 196.25 euros, a level previously reached on July 12. Thursday’s gains took the benchmark contract above a two-month high of 194.25 euros hit on Monday and saw it breach chart resistance around 195 euros.
US wheat was also higher to trade near a three-month high struck earlier this week. “We’re seeing a change in the market dynamic, supported by the high pace of US and EU exports, weather worries and a global wheat supply balance that isn’t all that comfortable given limited availability of quality wheat,” Alexis Poullain of French consultancy Agritel.
Forecasts of crop-threatening frost in eastern Australia have added to weather concern after frosts in Argentina and Brazil and heavy rain that has disrupted sowing in Russia and Ukraine. On the demand side, US wheat has attracted strong demand from China and Brazil while European Union export licences so far this season have been at a record pace.
A US government shutdown due to a budget row prevented the publication of latest weekly US grain export sales, and dealers said this may have contributed to buying in Paris. “The blackout in the US has made people a bit nervous and led to some precautionary buying, whereas you would have expected the market to be more cautious in the absence of the export data,” one dealer on the Euronext market said.
Weekly EU export data are due to be released later on Thursday. Some traders were cautious about the rally in Paris futures, noting that the French cash market was quiet, the euro’s strength was undermining export prospects and the breaking of chart resistance at 195 euros needed to be confirmed at the close. Rapeseed futures in Paris eased after a jump on Wednesday sparked by a European Union proposal for definitive anti-dumping duties against imports of biodiesel from Argentina and Indonesia. Courtesy: Reuters
Published in ZaraiMedia.com