imagePARIS: Paris wheat futures extended gains on Friday to a new seven-week high, carried along by technical momentum and a dollar-fuelled jump in S&P Futures.

The rise on the European market was capped by a sharp increase in the euro against the dollar, which further tempered export sentiment after a recent slowing in demand for French wheat.

May milling wheat, the benchmark on Euronext’s established No. 2 wheat contract, settled 2.25 euros, or 1.2 percent, higher at 196.75 euros a tonne.

It earlier reached its highest since Jan. 26 at 197.25 euros.

Over the week, the contract added 6.50 euros or 3.4 percent.

Chicago wheat futures climbed more than 3 percent as US commodities were boosted by the dollar, which resumed a pullback seen on Wednesday when the US Federal Reserve gave a cautious view on the US economy.

“The euro is seeing yo-yo movements and with the rise on the US market European prices are adjusting to remain competitive,” Gautier Le Molgat of consultancy Agritel said.

Paris prices were also supported by technical impetus from options trading and the filling of a previous chart gap between 195.75 and 196.25 euros, traders said. Strong European Union exports continued to underpin wheat prices.

The EU reported on Thursday a hefty 780,000 tonnes of soft wheat export licences, keeping the total so far in 2014/15 on a record pace. But French traders said new demand was light in wheat compared with brisk offtake for barley.

International wheat markets were also supported by concerns over adverse crop conditions in the United States and Russia, which could lead to a drop in production after bumper harvests around the world last year.

“The market is now a battle between bearish old-crop fundamentals and new crop weather/production issues, which may or may not exist,” David Sheppard, managing director at UK merchant Gleadell, said in a market note.

“Add in Black Sea politics (exports) and you have a potion for a perriod of increased volatility.

Copyright Reuters, 2015