PARIS - European wheat futures turned higher on Tuesday to come off a three-month low, supported by bargain buying and a fall in the euro.
Activity was restrained, however, as traders looked ahead to Wednesday's interest rate announcement by the U.S. Federal Reserve, and with cash markets starting to wind down before the year-end holidays.
"There is a widespread feeling that prices maybe fell too far and we're seeing a bit of short-covering," one dealer said. "We think the market trend change going into the new year."
March milling wheat on the Paris-based Euronext market unofficially closed up 3.25 euros, or 1.9 percent, at 178.75 euros a ton, recovering from an earlier fall to 174.75 euros, its lowest since Sept. 21.
Paris futures had been weighed down by recent strength in the euro and the prospect of export competition from Argentina, reinforcing bearish sentiment in a well-supplied wheat market.
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But analysts say once the U.S. Federal Reserve rate verdict is out of the way, grain markets could bottom out after already pricing in large global supplies and the likelihood of increased shipments from Argentina, as new President Mauricio Macri cuts export taxes and eases currency controls.
The euro fell on Tuesday from a six-week high against the dollar as expectations strengthened for a U.S. interest rate rise.
A steadying in Chicago wheat futures also helped European prices recover.
German cash premiums in Hamburg were little changed, with a slight rise in purchase interest and reluctant farmer selling underpinning the market.
"There is some more purchase interest visible with a couple of ships in German ports to be loaded before Christmas but exports from Germany are well down on last year," a German trader said.
"Farmers are not ready sellers at current depressed outright prices."
Standard wheat with 12 percent protein content for January delivery was offered for sale unchanged at 0.5 euros under the Paris March contract. Buyers were offering 1 euro under against 1.5 euros under on Monday.
