PARIS: European wheat futures extended gains on Monday, reaching their highest in almost three months, with support from concern over a cold snap in Europe and dry conditions in the United States.
Gain were moderate, however, as traders saw only a limited threat of frost damage to European crops while a steady euro served as a reminder of a poor export season so far.
May milling wheat on the Paris-based Euronext exchange settled 1 euro, or 0.6 percent, higher at 165.50 euros ($203.53) a tonne.
In late trading it reached a session high of 165.75 euros, a level not reached since Dec. 5.
“The cold weather conditions in Europe are encouraging market participants to cover positions, without giving them the sentiment that there is major upside to prices,” consultancy Agritel said in a note.
“For now, Poland is the country that is raising the greatest concern about frost.”
In France, the European Union’s biggest wheat producer, intense cold since Sunday was forecast to ease by Thursday.
“The cold spell isn’t expected to last very long in France, which should limit any damage to crops, especially in soils that are saturated with water,” one French trader said.
However, traders said conditions would have to be monitored, with an abrupt thawing in temperatures in France from Thursday leaving crops more vulnerable to another cold snap.
The immediate threat of damage was also seen as limited in Germany despite double-digit negative Celsius temperatures forecast until the weekend.
“The market is taking a somewhat relaxed view of the frosts as there is reasonable snow cover protecting wheat crops, especially in north German export regions, where temperatures were not the coldest anyway,” one German trader said.
“I think there is optimism that wheat will come through without much damage and warmer temperatures are forecast for next week.”
The European market was also supported by renewed concern over drought in wheat belts in the U.S. Plains. Chicago wheat rose to its highest in almost seven months.
On Germany’s cash market, standard bread wheat with 12 percent protein content for March delivery in Hamburg was offered for sale 0.5 euros down at 3.5 euros over Paris May.
Feed wheat prices in Germany’s South Oldenburg market were again just above milling wheat. Delivery for March onwards was offered for sale up 2 euros at 171 euros a tonne, with buyers seeking 170 euros. Trade was also reported at 170 euros.