Evening markets:Paris wheat prices build on stockpiling talk

Monday offered two reasons to buy futures in Paris wheat, despite a softer day for some other commodities, and the grain took it to revisit E250 a tonne again for the nearest-but-one contract.

Volatility was low, as might be expected on a day when the US markets which have a big part in setting the direction of prices of commodities, among other assets, were closed.

And what external markets were open offered an array of signals for caution, as fears for eurozone debt revived, sparked by concerns over Germany's support for the so-called European Financial Stability Facility bailout fund for debt-stricken eurozone states.

Shares eased in London, as did copper, while oil dipped too, by 0.6% to just above $91 a barrel, as warmer temperatures in Europe raised expectations that peak winter fuel use may have passed.

Oil, besides being a flagship commodity, has an especially big influence on crops used in making biofuels, which include in Europe wheat and notably rapeseed.

Food fears

Still, wheat hardly looked anomalous for rising 0.3% to close at E251.75 a tonne in Paris for March delivery, and by 0.5% to E249.00 a tonne for May, after touching E250.00 earlier.

The upside to eurozone exports, such as wheat, from the debt hubbub was a weakening currency which lifted their competitiveness, so supporting their price.

And, right on cue, there was indeed talk of substantial exports, notably to North Africa, where regimes stunned by the ousting of Zine al-Abidine Ben Ali as Tunisia's president appear to have stepped up imports to beef their own supplies and avoid any risk of a similar fate.

"We have a lot of big buyers from a global perspective looking to build up their stocks," Jaime Nolan, at the European office of US broker FCStone, said, citing in particular North African and Middle Eastern countries.

'Sub-zero cold'

Market talk had Algeria, a big buyer of French grain, and which has already suffered riots over food prices, down as a snapping up of at least 600,000 tonnes of wheat late last week.

Separately, Libya was said to have bought 100,000 tonnes, after a tender which closed a week ago, and following a cut last Wednesday of import duties on food.

As an extra help to grain prices, rains in Australia appear to have claimed more unharvested crops, this time in parts of Victoria.

Furthermore, the dry southern US Plains appear to have had little further snow to protect them from freezing conditions.

"Sub-zero cold across northern and western areas with limited protective snow cover stressed the already drought-stressed crop," Meteorlogix said.

Strong sterling

Not that this could helped London wheat higher too, when sterling was on a roll, hitting an eight-week high against the dollar, and gaining more than 1 cent against the euro, on expectations that inflation may force a rise in UK interest rates, potentially in May.

With London also trading feed wheat not so useful in dispelling the risk of food riots, the best-traded May contract fell 1.4% to £194.50 a tonne.

London cocoa also suffered from the pound's strength, easing 0.5% to £1,999 a tonne for May delivery.

Other London-traded soft commodities, being traded in dollars, performed better. March robusta coffee beans added 0.8% to $2,140 a tonne, while white sugar for the same month added 0.6% to $774.20 a tonne.

(Source: http://www.agrimoney.com/marketreport/evening-marketsparis-wheat-prices-build-on-stockpiling-talk--924.html)