By 0930 GMT new crop futures on Euronext milling wheat futures 0#BL2:
were up between 3.50 and 9.00 euros with benchmark November BL2X7 up 6.25 euros,
or 3.6 percent, at 180.25 euros, after hitting a high of 181.00 euros, a level
not seen since the launch of the futures contracts in 1998.
‘The market is irrational and following the speculation on US markets,’ a
trader said after the November contract hit the psychological level of 180
euros.
French futures are now far above the highs reached late 2003 after the severe drought that badly damaged European
crops.
The market also received support from a new cut in estimates by French
analyst Strategie Grains for the European Union’s 2007 grain harvest, now pegged
at 276.5 million tonnes, down 3 million tonnes from its May estimate but 6
percent above 2006.
Of this, the soft wheat output estimate was cut by 2.6 million tonnes to
121.8 million, but the analyst said the crop would still be five million tonnes
larger than last year’s.
However, some traders feared the final crop could be even
lower.
The state of the French crop was also increasingly worrying the market as
the recent wet weather raised concern about possible crop-damaging
diseases, traders said.
‘Most of the fundamentals have now priced in but due to the lack of
landmark there is no limit to the rise anymore,’ another trader
said.
Wheat futures at the Chicago Board of Trade closed sharply higher on
Wednesday, hitting the highest spot price in 11 years on speculative
buying tied to tight world supplies and bullish technical
signals.