LONDON, Jan 5 (Reuters) – European wheat prices rose on Monday, supported by a weaker euro against the dollar, strong international demand and concern over potential crop damage due to cold weather in the United States.
“It’s mainly about the cold weather in the U.S.,” a Euronext trader said of the price rise.
A cold snap across the United States raised concerns about damage to the dormant winter wheat crop, with the largest areas of concern in eastern Nebraska and northern Missouri.
Benchmark March milling wheat on Paris-based Euronext rose 1.9 percent to 202.75 euros a tonne.
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The euro tumbled to near a nine-year low, undercut by growing concerns that Greek parliamentary elections will result in a left-wing government that will aim to cancel austerity measures along with a big portion of Greece’s debt.
The fall meant bigger chances for euro-denominated wheat to gain markets at a time of strong demand and lower availabilities after Russia’s move to curb exports through an export tariff.
“All these elements are likely to keep a certain tension in grain prices,” French consultancy Agritel said in a note.
Algeria’s state grain agency OAIC bought at least 450,000 tonnes of optional-origin milling wheat in a tender that closed last week, European traders said, with some citing a purchase of as much as 550,000 tonnes.
However, volumes purchased did not cover Algeria’s needs for the March/April period OAIC was tendering for, traders said.
Traders also reported that China bought about 120,000 tonnes of hard wheat in past days, including two consignments of about 60,000 tonnes for nearby shipment. Origin was unclear but may include some Australian and U.S. wheat.
Feed wheat futures in London were also higher with May ending 2.80 pounds higher at 138.80 pounds a tonne.
German cash wheat premiums in Hamburg were weaker as some buyers declined to follow the rise in Paris.
Standard wheat with 12 percent protein content for delivery in Hamburg in March was offered for sale at a premium of 5 euros over the Paris March contract against 6 euros over on Friday. Buyers were offering 4 euros over.
“Some buyers were declining to follow the rise in Paris today, preferring to wait and see how the markets develop after the holiday season,” one trader said. “But the markets remain well supported with the weaker euro likely to help EU export sales in the early phases of the new year.”
