EU wheat higher as maize leads weather rally

Euronext wheat rose on Monday, drawing support from a surge in maize futures on both sides of the Atlantic as scorching weather raised concerns about crop damage.

An easing euro FX:EURUSD and a large purchase by Saudi Arabia also lent some support to Euronext wheat, though expectations that Black Sea origins would cover most of the Saudi volume tempered sentiment.

September wheat EURONEXT:EBM1! on Paris-based Euronext was 1.5% up at €204.50 ($233.46) a metric ton by 1505 GMT.

Chicago wheat CBOT:ZW1! added around 2%, spurred by a rally of more than 3% in U.S. corn CBOT:ZC1! as a U.S. heatwave stirred initial concerns about stress to Midwest corn.

Back on Euronext, November maize EURONEXT:EMA1! was 3.6% up at €239 a ton. It earlier set another contract high at €240 to extend its exceptionally large premium over wheat.

Hot, dry weather forecast in France this week — with temperatures nearing 40 degrees Celsius (104 degrees Fahrenheit) in the southwest — threatened to worsen maize crop conditions that plummeted during a late-June heatwave.

French growers are already projecting a 30% drop in maize production this year.

A poor maize crop could increase demand for European maize imports and for wheat use in livestock feed.

At the same time, wheat prices were being capped by reports of good overall volumes in the fast-moving French wheat harvest, plus expectations of high production in the Black Sea export zone.

Russian wheat export prices continued to fall last week on harvest expectations, analysts said.

Saudi Arabia purchased 661,000 metric tons of wheat in a tender, its state buyer said on Monday.

Traders viewed the prices paid as aggressive and saw Russian wheat was well placed to cover a large part of the order.

($1 = 0.8760 euros)