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EU wheat pares gains after 1-month high as world weather assessed

Reuters, 17.05.19

PARIS, May 17 (Reuters) - Euronext wheat futures ended little changed on Friday after coming off a one-month high as a Chicago rally slowed and traders set rain threats to U.S. crops against more favourable growing conditions across Europe.

Front-month September milling wheat BL2U9 on Paris-based Euronext settled unchanged on the day at 173.75 euros ($193.96) a tonne.

It earlier rose to a one-month high of 175.25 euros, supported by a further rise for Chicago wheat Wv1 before the U.S. market pared its gains.

Chicago corn and wheat have surged this week as forecasts of heavy rain next week have deepened concern about spring planting delays and potential damage to winter wheat crops, encouraging investment funds to cover large short positions.

Euronext saw more moderate gains this week, with the September contract adding 2.8% compared with an 11% rise so far for the most active Chicago wheat futures Wv1, as the U.S. context was set against good crop prospects across Europe and the Black Sea region.

Russian consultancy IKAR said on Friday it had raised its forecast for Russia's 2019 wheat crop by 400,000 tonnes to 81 million tonnes.

Rains forecast in Russia next week were also expected to benefit crops after a hot spell in recent days.

"On the Paris market, basically if you look east towards the Black Sea it's bearish and if you look west to the U.S. it's bullish," Sebastien Poncelet of consultancy Agritel said.

In the European Union, harvest prospects had improved after rain eased dryness, analysts said.

French soft wheat conditions were unchanged in the week to May 13, with 79% of crops rated good or excellent, farm office FranceAgriMer said on Friday.

In Germany, rain forecasts were being monitored as recent showers were seen as insufficient in particularly dry regions.

"There was rain in east Germany in past days which was very welcome after the dry spring. More rain is needed and some is forecast again next week, but forecasts differ and so the market is waiting to see how much actually arrives,” a German trader said.

Standard bread wheat with 12 percent protein for September onwards delivery in Hamburg was offered for sale at 0.75 euro under Paris December BL2Z9 against 0.50 euro under on Thursday.

Levels were trimmed to adjust for the earlier gains in Paris although sellers were reluctant to reduce levels.

In exports, wheat shipments from Germany in the past week included about 50,000 tonnes for South Africa, 40,000 tonnes for Tanzania and 30,000 tonnes for Saudi Arabia, the German trader said.

In France, cash premiums firmed again in the port zones of Rouen and La Pallice amid some late-season demand, traders said.

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