Black Sea concerns persist as EU wheat prices rise with Chicago
The European wheat futures closed higher on Wednesday as a result of a turnaround in Chicago. News that Ukraine fired more Western missiles at Russia sparked fears about a war escalate.
Euronext was also boosted by the fall of the euro in relation to the dollar.
The most active March wheat position, on Paris' Euronext exchange, closed 1.3% higher at 230.25 euro ($242.45) a metric ton. This is close to a two-week-old peak of 230.50 euro.
Chicago wheat has recovered from a previous fall and is now heading for its fourth consecutive daily increase.
Dealers said that a large short position in wheat held by investors made the market more prone to rallies. Data published on Wednesday revealed that financial participants extended their net short positions in Euronext over the past week.
Ukraine launched British Storm Shadow cruise-missiles against Russia on Wednesday. This was a day after the firing of U.S. missiles ATACMS, and after President Joe Biden, who is leaving office, gave it permission to do so.
The consultancy CRM Agri reported that "wheat prices have reversed some early losses due to concerns about renewed Black Sea tensions. These were stoked after a further attack on Russia by Ukraine using long-range rockets."
Wheat market reactions are sensitive to any disruptions to the Black Sea grain trade. However, increased flows of Ukrainian wheat in the last year have dampened headlines about war.
The front-month December closed 0.8% higher at 219.75 Euros, near the two-week high on Tuesday.
The Black Sea exports have increased their competition in the short term, and this has cooled optimism in Western Europe following recent sales to Morocco.
On Wednesday, the price of a ton of Russian wheat with 12.5% protein for December shipment was $226-$228 FOB. Russian 11.5% was $219-$220, and Ukrainian 11.5% was $225-$227.
A German trader stated that "Russian exports are priced below $230 per ton FOB, and more Russian sales can be expected on markets such as Morocco where Russia has a large share of the business."
(source: Reuters)
