Euronext wheat rose on Thursday, led by spot futures that posted a one-month high, as initial concerns about proposed Chinese tariffs on U.S. crops subsided and traders focused on disruption from a rail strike in France and the poor state of U.S. wheat.
May milling wheat, the most active contract on the Paris-based Euronext exchange, was up 1.00 euro, or 0.60 percent, at 167.25 euros ($204.35) a tonne by 1542 GMT, after earlier reaching 167.50 euros, its highest since March 2.
Chicago grain futures rose, with soybeans recovering after sliding as much as 5 percent on Wednesday when Beijing announced retaliatory levies on U.S. goods including soybeans, the most valuable U.S. farm export to China.
“It doesn’t make sense for China to shoot itself in the foot with soybean tariffs, they’re the world’s biggest importer,” one futures dealer said. “It’s a case of showing that they can counter-attack. I think that it will end up being negotiated.”
In France, a rolling rail strike was supporting spot prices as it was causing transport headaches.
“The May contract on Euronext is going to remain well supported with the strikes in France. For new-crop contracts, I think the concern about U.S. crops is a bit overdone. Global wheat stocks are so large that it would take a big crop problem in Russia during spring to change things,” the dealer said.
Weekly European Union data also underlined a sluggish export season, with EU soft wheat exports running 25 percent below last season’s pace.
Traders said a tender purchase by Algeria earlier this week totalled 390,000 tonnes, more than the 330,000 tonnes initially estimated.
The wheat was expected to be sourced mainly from France, but traders said it would make limited difference to a disappointing export campaign.
In Germany, cash market premiums in Hamburg drifted down.
Standard bread wheat with 12 percent protein content for April delivery was offered for sale down 0.5 euro at 4.5 euros over Paris May. Buyers were offering about 1 euro under selling prices against 2 euros under on Wednesday.
“The international markets are rising again after the China trade shock on Wednesday and the meltdown some feared does not seem to be materialising so attention is turning back to domestic factors,” one German trader said.
“With German exports continuing at a modest level, local demand, especially for feed wheat, is again the demand driver.”
Feed wheat prices in Germany’s South Oldenburg market were again over milling wheat, with April onwards delivery offered for sale unchanged at 176 euros a tonne with buyers seeking 175 euros.
Feed wheat for April onwards delivery had traded on Wednesday at 175 euros, traders said.