PARIS — European wheat futures rose as U.S. grains and wider markets steadied after day-earlier losses, with European wheat also finding support from a weak euro.
Operators were watching for the results of a latest wheat import tender by Egypt, the world's largest importer.
Attention will be on whether Argentine wheat can win another sale after claiming the bulk of the previous purchase by Egypt's state buyer and whether a recent slide in the euro can help bring French wheat into the frame, traders said.
"Egypt is not an easy destination for us. Even with the euro where it is, French wheat is going to have to be sold at a discount to compete with other origins," a French exporter said.
The euro hit a two-month low against the dollar before steadying as investors remained nervous about the prospect of mass euro-zone sovereign downgrades by credit rating agencies after a European Union summit last week failed to convince markets.
"We're benefitting in competitiveness, but this masks the fact that the euro is falling because investors do not have confidence in the currency and that's much more serious," a cash broker said.
On the Paris-based futures market, March milling wheat was up 2 euros, or 1.14 percent, at 177.25 euros a ton by 12:58 GMT.
The market was also being supported by technical adjustments ahead of a Thursday deadline for exercising options on front-month January contracts, traders said.
Grains drew some support from a steadying in financial markets after sharp losses on Monday.
The market also remained capped by rising global grain supply as illustrated by last Friday's estimates from the U.S. Department of Agriculture.
Morgan Stanley lowered its price forecasts for corn, wheat and soybeans due to higher global supply but still saw upside potential in view of relatively low U.S. stocks, especially in corn and soybeans.
GERMANY
In Germany, prices were little changed with lack of farmer selling meeting a lack of purchase interest.
Standard new crop bread-quality wheat for January delivery in Hamburg was quoted around 190-191 euros a ton. Buyers and sellers were increasingly far apart in price ideas, making prices difficult to assess, traders said.
Hamburg selling prices remained around 10 euros above Paris futures as farmers retained produce in the belief 2012 supplies will be tight after Germany's disappointing 2011 wheat harvest.
"Farmers and other sellers are extremely reluctant to deal at current prices, which are low in outright terms despite the premium over Paris," one trader said. "There was a 6 euro spread between some buyers and sellers today, which is too big to bridge with negotiations."
"The export outlook is still pretty black despite the very welcome weakness of the euro as Argentina is the latest cheap origin to flood the world market. This poor export outlook is encouraging consumers to hold off in the hope of further price falls."
Another trader added: "Argentina has just won business from Yemen, which is another example of the sudden inroads being made by Argentina in Middle Eastern export markets."
The return of water levels on the Rhine and Danube rivers was making transport easier after vessels had been sailing only partly loaded since early November, and traders were organising shipments of delayed loads.
"The return of the Danube to normal levels will permit more Hungarian maize to be sold to west Europe, but the first shipments may have to wait until after the Christmas and New Year break to be moved," the second trader said.
