EU wheat rises as Black Sea risks spur short-covering

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Euronext wheat futures rose on Friday, tracking a rally in Chicago as delays to some Russian exports and concern about an escalation in fighting between Russia and Ukraine encouraged participants to cover positions.

Adverse weather, including dryness in parts of North America and the Black Sea region, as well as damp conditions in France, also supported prices as the market enters the sensitive spring growing season in the northern hemisphere.

May milling wheat BL2K4, the most active position on Paris-based Euronext, was 1.4% up at 202.75 euros ($219.80) a metric ton by 1615 GMT.

Chicago wheat Wv1 was up 2% in U.S. trading.

Fresh reports of administrative delays to Russian export cargoes, including vessels bound for major importer Egypt, unsettled the market like two weeks ago.

“There is definitely more market concern that something is happening to hinder Russian grain shipments,” a German trader said.

However, futures pared earlier gains after news that two grain cargoes, including one for Egypt, had received phyto-sanitary certificates from Russian authorities.

Some traders played down the idea of further cargo delays and noted that Russian prices were stable, albeit maintaining recent gains.

Currently I cannot see signs of more ships being delayed in Russian ports because of the phyto-sanitary dispute between export houses and the authorities,” said one Russian trader involved in Russian business.

“It seems to be more fear of delays than actual delays.”

Russia is the world’s largest wheat exporter and expectations that it will ship a record volume this season helped push futures to 3-1/2-year lows last month.

Reports of Russian export delays fuelled short-covering by investment funds in front-month May futures, Andrey Sizov, managing director of consultancy SovEcon, said.

In news from the Russia-Ukraine war, a reported Ukrainian drone strike in southern Russia caught attention as it targeted sites near the important port city of Rostov, he said.

The market was also awaiting more details on a Polish government plan to allocate some $500 million to buy excess grain from its farmers, who have been protesting against cheap imports from Ukraine.

“It looks like symbolic politics to me because weakness in Polish grain prices is caused by the world market fall this year, not Ukrainian grain, which is anyway transiting the country now,” another trader said.

Source: Reuters