EU wheat falls further as Chicago slide outweighs export hopes

PARIS, Feb 27 (Reuters) - Benchmark wheat prices on Euronext extended losses on Thursday to a near three-month low as a dollar-fuelled slide in U.S. futures countered support from improved export prospects for Western European wheat.

May wheat BL2K5, the most-active contract on Euronext, settled 1.0% down at 227.75 euros ($237.04) a metric ton.

In late trade the contract dropped to 227.50 euros, its lowest since December 4 as it dipped below four-week lows set in recent days.

Chicago wheat Wv1 was down around 3% in U.S. trading. GRA/

The U.S. market was pressured by government forecasts of increased wheat planting and stocks for next season, as well as lower than anticipated weekly exports and a jump in the dollar, after President Donald Trump surprised investors by saying tariffs against Canada and Mexico will go ahead next week.

Wheat markets had already retreated this week after fears faded about the impact of cold in U.S. and Russian wheat belts.

"In summary, wheat markets face near-term pressure from trade tensions, economic headwinds, and more favourable weather," British merchant ADM Agriculture said in a note.

A drop in the euro against the rallying dollar helped underpin Euronext and maintain the renewed competitiveness of Western European supplies against rising Russian prices.

Traders continued to cite unconfirmed talk of French and German wheat sales to North African destinations including Morocco since last week.

“The stronger Russian rouble supporting Russian prices is positive news for EU export prospects,” one German trader said.

“But price competition from other Black Sea origins remains tough and Black Sea weather is looking non-threatening to wheat.”

Traders said Russian 11.5% protein wheat was on Thursday around $243-$246 a ton FOB for March/April shipment, about $1 more expensive than the west EU following many months in which Russia was far cheaper than the EU.

But Romanian and Bulgarian 11.5% were still below the EU at $240-$243 while Ukrainian and Argentine wheat was cheapest, both around $236-$238.

There were also doubts about overall international demand, with market talk that Chinese buyers have cancelled several cargoes of Argentine wheat following reports of Chinese cancellations of Australian wheat in recent weeks.

($1 = 0.9608 euros)