Paris wheat futures, which hit a seven-week high on Wednesday, may be about to lose some of their-larger-than-usual premium to Chicago contracts, as waning demand pressures weigh on values.
Wheat for May on Wednesday on Paris's Matif exchange closed at E197.50 a tonne, the contract's best close since early January, and earlier came E1.00 from regaining the psychologically important E200-a-tonne mark.
The rise contrasted with a decline in Chicago futures, which stood down 1.2% at $6.10 ½ a bushel in late deals, on a decline blamed on ideas that prices well above three-year lows reached a month ago are deterring buyers.
And, with this leaving US wheat futures at a discount to their Paris peers equivalent of some E164 ($224) a tonne, commentators raised doubts over the appeal of European Union supplies to importers too.
"I struggle to see the driver behind this" outperformance by Paris, said Jaime Nolan Miralles, commodity risk manager at FCStone's Dublin office.
"We are lacking fresh international demand for EU wheat old crop, with central Europe in particular en route to a heavy balance sheet come marketing-year end.
"We might expect Chicago to close the discount to Matif."
On a front-contract basis, the discount is even larger, at more than E40 a tonne, compared with a 52-week average of less than E30 a tonne.
The strength appeared to reflect technical factors, Mr Nolan said, highlighting the E198.50-a-tonne level, for the May contract, as particularly important.
Both the 100-day moving average and the 23.6% retracement level, a key point for followers of Fibonacci analysis, are situated near this point.
"With fundamentals in my view failing to explain the current move in prices, I would suggest there is greater weighting behind this being a technical move," he said, flagging E203.25 a tonne and E208.50 a tonne as price targets if the E198.50-a-tonne level is breached.
Separately, Commerzbank restated a forecast of Matif futures closing the year at about E185 a tonne, a little below the futures curve.
"The European Union wheat price should show a less favourable trend" than Chicago prices, the bank said.
"EU wheat has profited especially from the shortage of quality wheat from Argentina and a high demand for feed wheat," with the bloc's exports soaring some 50% over 2013-14.
However, the price competition with US supplies, the good condition of EU winter wheat and the higher quality demands by Egypt – the top importing country, which is enforcing moisture limits in cargos below levels France can typically meet – "speaking against a sustained price level of over E200 per tonne ".