European wheat futures edged higher on Friday as a lower euro encouraged the market to hold above this week’s contract lows, but a tentative return to buying by Egypt failed to dispel concerns about lagging exports and high stocks.
March milling wheat was up 1.00 euro at 154.25 euros a tonne by 16:48 GMT on Friday. Dealers said the front-month contract was again supported by technical trading before options on March futures expire on Monday. May was up 0.25 euro at 160.50 euros.
March futures have recovered from a contract low of 149.00 euros on Wednesday, with dealers saying the market had found chart support around the 150 euro threshold.
Equities, oil and the dollar all recovered ground on Friday after steep losses this week sparked by jitters about the global economy. The dollar’s strength helped the euro ease from a near four-month high against the U.S. currency.
“The euro is helping us a bit and equities and oil are recovering. But we need a sustained rebound in financial markets and macroeconomic sentiment to encourage commodity buyers,” one futures dealer said.
“Egypt’s tender purchase wasn’t all that reassuring. They chose Romanian wheat and even if they had taken the two French cargoes offered, that would only have been 120,000 tonnes when we’ve got so much wheat.”
Egypt’s state grain buyer, the General Authority for Supply Commodities (GASC), bought 60,000 tonnes of Romanian wheat on Friday, after cancelling two tenders last week amid tensions with traders over Egyptian policy on grain fungus ergot.
Some traders saw encouragement in Egypt’s return to the market and also expected recent prices lows to stir more export demand for European Union origins.
“It was encouraging to see that EU wheat was competitive in the Egyptian tender today, with French wheat cheapest in FOB (free-on-board) terms and Romanian wheat eventually winning,” one German trader said.
However, the euro’s rally this week left other traders cautious about demand.
“The strength of the euro has been disappointing this week just at a time when an export window was opening for EU wheat,” another German trader said.
German cash premiums in Hamburg were little changed. Standard wheat with 12 percent protein content for March delivery was offered for sale unchanged at 1 euro over the Paris March contract. Buyers were offering 0.50 euro under Paris.
The run-up to a three-day holiday weekend in the United States, during which Chicago grain markets will be closed on Monday, was also encouraging a hesitant mood on the European market, traders said.