Benchmark March milling wheat on the Paris futures market was down 6.25 euros or 2.48 percent at 248.25 euros ($330) per tonne by 1208 GMT, after earlier reaching a low of 248.00, although that was still higher than the five-month low of 245.25 euros hit last week.
"We have the (price of) 245 euros in sight," a Euronext trader said, pointing however to thin holiday volumes focusing mostly on a spread between January and March contracts. In Chicago, wheat futures hit a new six-month low at a time when the origin was already the cheapest in the world, traders noted. This should help it win more deals when buyers come back to the market after the year-end break.
Traders said the focus would remain on weather conditions such as rain in Argentina and cold temperatures in Russia and the southern US Plains. Christmas rains have slowed 2012/13 wheat harvesting. The Agriculture Ministry last week had already cut its estimate for 2012/13 wheat production by 5 percent to 10.5 million tonnes, still higher than leading private forecasts but reflecting damage caused by the wet weather.
French analyst Agritel said it was still hard to assess the impact of the cold snap in Russia but that the winterkill rate could be 8 to 10 percent. The euro traded at $1.3279, up 0.4 percent on the day and just below an eight-month high of $1.33085 hit last week. Speculators further trimmed short bets against the single currency as euro zone debt worries ebbed. However, concerns the US Congress might fail to head off a potentially disastrous "fiscal cliff" of tax hikes and spending cuts that are due to kick in next year could cap the single currency's gains, strategists said.
GERMANY German wheat fell in the first day of trading since the market closed for the Christmas holiday, pushed down by the fall in Paris but with many market participants still absent. Standard milling wheat for January delivery in Hamburg was offered for sale down 3 euros and still holding well over Paris at 265 euros a tonne, with buyers at around 263 euros. "Lack of market participation means there is little to be read into the prices today apart from the continued high premiums being held over Paris because of the good German export outlook as Russia, Ukraine leave export markets, while our rival Argentina could also face a poor crop," one German trader said.