Wheat prices revived in Paris, even as they softened in Chicago, after France won a second order in eight days from Egypt, the top buyer of the grain, helped by the weaker euro.

Paris wheat for March regained the psychologically important E200-a-tonne mark at one point, before losing some ground to end at E197.00 a tonne, up 1.6% on the day.

The increase, despite small losses in Chicago wheat, the world benchmark, followed Egypt's award, at tender, of a 120,000-tonne order to French wheat.

The order took to 300,000 tonnes Egypt's state grain buyer, the General Authority for Supply Commodities (Gasc), has bought so far in 2011-12 from France, after a break of six months until December in purchases from the European Union's top wheat grower and exporter.

Russian strain  

The result also underlined the growing competitiveness of French wheat against rival Russian supplies, which, having dominated Egyptian trade in most of the last half of 2011, have found low prices hard to match as merchants have been forced to travel further into the interior to find grain.

"This increases expenses as grain has to be shipped from distant regions and therefore lowers the competitiveness of Russian grain."

French wheat has also been favoured by a declining euro, which on Friday reached its lowest against the dollar for 16 months, weakened by rumours that Standard & Poor's is poised to downgrade credit ratings for Austria and France, in the latest twist of the eurozone debt crisis.

A cheaper euro makes eurozone exports more competitive.

"You have to factor in the foreign exchange move into the tender result," Jaime Nolan Miralles, at FCStone's European office, told Agrimoney.com.

US competition 

However, the victory was also notable for a decline in shipping costs from France of, on average, more than $1 a tonne, over the last week.

Indeed, it was only shipping costs which kept US wheat out of the frame, with soft red winter wheat, the type traded in Chicago, offered by Toepfer at $251.19 a tonne - making American supplies the cheapest, by more than $7 a tonne, if freight is excluded.

Furthermore, wheat from Argentina, which competed strongly at the close of 2011, was not offered at all this time, an absence that may be linked to the poor weather dogging the country's corn harvest.

"Argentine feed wheat may be the first to benefit from displaced demand caused by a poor corn crop," a UK trader told Agrimoney.com.

Export upgrade

Mr Nolan Miralles said he was "not really surprised" by the rise in Paris wheat futures given the Egyptian tender result, and French victory reported for other destinations, such as Tunisia, too of late.

French farm office FranceAgriMer on Thursday lifted by 100,000 tonnes to 8.7m tonnes, its estimate of the country's wheat exports outside the EU in 2011-12 "taking account of the euro/dollar rate and loadings already done", with 5.2m tonnes shipped by the end of the first week of January.

"At this pace we would do 10m tonnes of exports [in 2011-12] but it's not possible in light of supplies," Xavier Rousselin, head FranceAgriMer's grain unit, said.

Mr Nolan Miralles added, however, that there was "little reason in the near term" to believe that French wheat futures would break out of a trading range of E180-210 a tonne they have held, on a front contract basis, for more than six months.