European wheat up on concerns over U.S. drought
AMSTERDAM, Jan 18 (Reuters) - European wheat futures rose on Friday as worries over drought-affected U.S. wheat crops kept attention focused on global supply tensions. * But gains were modest as the market consolidated after rallying this week in the wake of lower-than-expected U.S. wheat area estimates last Friday from the U.S. government. * Benchmark March milling wheat on the Paris futures market was up 1.25 euros or 0.50 percent at 249.25 euros a tonne by 1221 GMT to approach psychological resistance at 250 euros. * The market hit a four-week high on Wednesday at 255.50 euros but failed to break technical resistance at this level. * "The market climbed a good bit this week," a French futures dealer said. "We're looking for new direction." * Chicago wheat also edged higher on Friday to put it on course for its biggest weekly gain since July. * Last Friday's smaller-than-anticipated estimate of U.S. winter wheat sowings by the U.S. Department of Agriculture triggered a rebound on wheat markets after a year-end sell-off driven by liquidation by investment funds. * A persisting drought in some wheat-growing areas of the United States has fuelled supply fears after poor weather already dented harvests in major exporters like Russia and Argentina in the past year. * "The drought in the U.S. Plains is the Sword of Damocles hanging over the market," the dealer said. "The little bit of rain that they've had is not going to resolve the situation." * An official cut to Argentina's wheat harvest on Thursday due to harsh weather together with talk of potential Russian imports also underlined tightening global availabilities. * But French traders said comments by analysts SovEcon that French wheat was competitive against domestic supply to the Russian city of St Petersburg did not make such deals likely. * "As of today it's something of a theoretical calculation," a French trader said. * "The first thing the Russians would do is to take some Kazakh and Ukrainian wheat. There are also some bits and pieces left in the Baltic countries. We would come last and that would mean the situation is really bad over there." * Weekly European Union data on Thursday showed 340,000 tonnes of soft wheat export licences were awarded this week, keeping the total this season well above the level in 2011/12. * However, in a sign of waning competitiveness of EU wheat, mainly in southern EU markets, the EU also cleared licences to import 89,000 tonnes of wheat under its quotas, including 51,000 tonnes for a sub-quota of U.S. wheat. GERMANY * German wheat retained large premiums over Paris because of export hopes and a lack of farmer selling with high feed wheat prices also providing background support. * Standard milling wheat for January delivery in Hamburg was offered for sale down 1 euro but over Paris at 265 euros a tonne with buyers at around 263 euros, with prices still adjusting to late falls in weakness in Paris trade on Thursday. * "There is a lack of willingness to sell with people starting to expect rising prices in coming months as the global harvest news continues to be bad, such as we have just received from Argentina," one trader said. * "The poor Argentine crop raises questions about where Brazil will buy its milling wheat and could also bring into question the status of advanced sales of Argentine milling wheat to North Africa and South Africa." * Brazil is traditionally a huge buyer of Argentine bread-quality wheat. * Repeated demand and tight supplies again kept German feed wheat around the same level or even above milling prices. * Feed wheat for January-March delivery in the South Oldenburg market near the Netherlands was offered for sale down 1 euro but above milling wheat at 269 euros a tonne with buyers at 267 euros. * "There is talk about more feed wheat imports by Germany and other North European countries from the U.S. or South America because of current high prices," a trader said. * Prices as of 1310 GMT Product Last Change Pct Move End 2011 Ytd Pct Paris maize 241.50 0.50 +0.21 197.25 22.43 Paris rape 464.00 2.75 +0.60 421.50 10.08 CBOT wheat 783.75 2.50 +0.32 671.25 16.76 CBOT corn 727.50 3.00 +0.41 654.75 11.11 CBOT soybeans 1434.50 4.25 +0.30 1207.75 18.77 Crude oil 95.30 -0.19 -0.20 98.83 -3.57 Euro/dlr 1.33 0.12 +9.84 1.30 2.71 * All grain and oilseed prices for second position. Paris futures prices in Euros per tonne, London wheat in pounds per tonne and CBOT in cents per bushel. (Reporting by Gus Trompiz in Paris, Michael Hogan in Hamburg and Ivana Sekularac in Amsterdam)
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