PARIS, July 5 (Reuters) - Euronext wheat extended a rally on Thursday to its highest in over a month as latest crop estimates reinforced concern about deteriorating prospects for this summer’s harvest in Europe.
December milling wheat, the most active position on Paris-based Euronext, unofficially closed 3.00 euros, or 1.6 percent, higher at 189.50 euros ($221.60) a tonne.
In late deals it rose to 190.00 euros, its highest since May 29 and approaching the 10-month peak of 190.50 euros it hit on that date.
Germany’s 2018 winter wheat harvest will fall to 20.5 million tonnes, down 15 percent from 2017, after crops suffered from dryness and hot weather, German farming association DBV said in its first harvest report on Thursday.
Parched conditions in northern Europe along with uncertain prospects in France led forecasters in a Reuters poll, also published on Thursday, to anticipate on average that soft wheat production in the European Union will fall around 4 percent this year to 136 million tonnes.
“The forecasting models are working overtime and to put it mildly crop estimates are getting lighter and lighter,” a French trader said. “The export surplus of milling wheat is looking smaller and smaller.”
In France, market participants were continuing to grapple with an expectedly low harvest forecast by Strategie Grains, which sparked the rally last Friday.
“Strategie Grains’ projections are not borne out by feedback we’re getting but given the uncertainty some people prefer to cover themselves,” a physical broker said, adding that the harvest picture would not become clear before mid-July.
Nervousness about harvest supply helped push physical premiums at French ports up 1-2 euros, sending outright prices sharply higher when factoring in the Euronext rise.
EU soft wheat exports, excluding flour, reached 20.3 million tonnes in the 2017/18 season that ended on June 30, down 16 percent from 24.0 million in 2016/17, official data showed on Thursday.
Average daily volume for Euronext’s commodities derivatives, mostly generated by wheat, reached 62,276 contracts in June, down 1.9 percent from May but 9.1 percent higher than in June last year, Euronext said in a statement.
$1 = 0.8551 euros Reporting by Valerie Parent in Paris, writing by Gus Trompiz; Editing by Jan Harvey