European wheat market follows price increase in Chicago

Wheat prices on the Paris futures market are following price movements in the United States. In particular, poor crop prospects in the US are pushing prices higher. In Europe, this is receiving additional support this week from a weaker euro. The September contract closed on Tuesday on the Matif futures market in Paris €1.75 higher than on Monday, at €215 per tonne. The December contract is a further €9 higher at €224 per tonne. March is approaching €230 per tonne. Following the strong rise on Monday, Chicago recorded another modest increase. July gained 2¾ US cents to $6.67½ per bushel. Later contracts posted similar gains. December is now trading at almost $7 per bushel, equivalent to around €221 per tonne. This leaves only a small gap with Paris. In Chicago, September is even quoted at exactly the same level as in Paris: €215 per tonne. This means prices have recovered from the downward pressure seen at the end of last week. By the close of trading on Tuesday, quotations were almost back at the same level as a week earlier. Although rainfall is forecast for dry areas in the US next week, analysts say the rain will arrive too late for most crops. At best, it may delay the start of the harvest. Hard red winter wheat in the southern Plains in particular is suffering heavily from the prolonged drought. Developments in the wheat market are creating a somewhat more positive sentiment. For the time being, despite the drought problems in the US, the market does not appear likely to make another sharp upward move. Tuesday’s trading suggests that traders are keeping a lid on prices. Following the recent recovery, investment funds have also taken some profits. Buyers therefore remain cautious.