October 17, 2019 / 3:16 PM / a month ago

EU wheat rises to 3-month high on export demand, weather risks

PARIS, Oct 17 (Reuters) - Euronext wheat prices rose on Thursday to their highest level in almost three months as steady export demand and weather risks in several exporting countries raised the prospect of tightening global supply.

Benchmark December milling wheat on Paris-based Euronext was up 1.50 euros, or 0.8%, at 181.50 euros ($201.70) a tonne by 1501 GMT.

It earlier climbed to 181.75 euros, its highest level since July 19, surpassing a 2-1/2 month peak of 181.25 euros struck on Monday.

Chicago wheat rose around 2%, also reaching a three-month high, as traders assessed the risk to U.S. crops from a cold spell as well as expectations of yield losses from dry weather in southern hemisphere exporters Australia and Argentina.

“The current wheat rally is pricing some demand rationing, maybe anticipating issues in Argentina, Australia and with North American spring wheat,” a futures dealer said.

On the demand side, Saudi state buyer SAGO called a tender to buy 595,000 tonnes of wheat, a day after top importer Egypt booked 405,000 tonnes of wheat including one cargo of French supplies.

Strategie Grains, meanwhile, sharply raised its forecast for European Union soft wheat exports this season, citing competitive EU prices and lower-than-expected global supply.

In a monthly report, the consultancy forecast 2019/2020 soft wheat exports outside the EU at 27.3 million tonnes, up from 25.7 million projected in September.

Gains on Euronext were capped by a chart resistance zone at 181-182 euros as well as a sharp rise in the euro following the announcement of an agreement between Britain and the EU on the terms of a British withdrawal from the bloc.

Volumes on Euronext were moderate, with many European market participants attending an annual industry event taking place on Thursday and Friday in Vienna.

On France’s physical market, a slow-moving maize harvest has supported prices this week, with particularly tight supply in the major livestock region of Brittany pushing premiums up sharply there, traders said.

$1 = 0.8998 euros Reporting by Gus Trompiz in Paris; Editing by Pravin Char

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