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Paris wheat firm as Chicago bounce, hot weather offset euro rise

Reuters, 20.06.19


PARIS, June 20 (Reuters) - Euronext wheat ended higher on Thursday as a rebound in U.S. futures and concern over hot weather across Europe countered pressure from a surge in the euro.

Front-month September milling wheat BL2U9 on Paris-based Euronext settled up 1 euro, or 0.6%, at 180.00 euros ($203.18) a tonne.

It earlier fell to a one-week low of 177.50 euros before steadying as Chicago wheat turned higher in U.S. trading.

Grain markets had eased in the past two days as a rally fuelled by torrential rain U.S. grain belts petered out.

But forecasts of more rain in the Midwest, coupled with an export-friendly slide in the dollar, helped Chicago futures bounce on Thursday. GRA/

The wheat market is continuing to expect large harvests this summer in Europe and the Black Sea region, but the onset of hot weather was adding some caution.

"EU wheat prospects remain favourable, although concerns are now switching to the forecast of higher temperatures across much of the western EU (France and Germany) and its potential impact upon the crop," merchant ADM Agriculture Ltd said in a note.

In France, the European Union's biggest grain producer, hot weather is expected to build up from the weekend and reach the mid- to high 30 degrees Celsius in the middle of next week.

In Russia, the world's largest wheat exporter, consultants IKAR and SovEcon each downgraded their forecasts for Russia's wheat exports in the 2019/20 season starting in July in the wake of recent hot, dry weather.

In Germany, however, the arrival of warm, sunny weather was seen as favourable for crops after recent rain that alleviated parched conditions in some regions.

"Sunshine is forecast over the weekend which will also be welcome for wheat. As each day goes by the harvest prospects are looking better," one German trader said.

Export sentiment in western Europe remained negative, with the euro's rally against the dollar clouding prospects in the face of competition from cheaper eastern European origins.

"I have not heard of any major new crop export sales of German wheat outside the EU yet," the trader added.

The euro's strength could also reduce the chances of EU supplies being chosen in a tender being held by Saudi Arabia to buy 900,000 tonnes of barley.

Euronext said late on Wednesday it would introduce physical delivery for wheat traded on its futures market at ports on France's Atlantic coast starting in September 2020. The exchange currently offers delivery in northern France.

($1 = 0.8859 euros)



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