EU wheat hits 7-month low on renewed export worries

PARIS, March 27 (Reuters) - Benchmark wheat futures on Euronext fell on Thursday to a seven-month low as a firmer euro and sparse international demand revived concerns about short-term export demand this season.

May wheat BL2K5 on Euronext settled down 1.7% at 218.25 euros ($235.54) a metric ton after touching its lowest price since August 27 at 217.25 euros.

The contract had steadied on Wednesday after a two-week low, but breached chart support on Thursday as Chicago wheat Wv1 fell in U.S. trading. GRA/

Low weekly U.S. export sales underscored tepid international demand while a rebound in the euro EUR= against the dollar disappointed traders after western European wheat had become more price-competitive this month.

"The market is focusing again on the absence of demand," a futures dealer said. "There was talk yesterday that French wheat could be competitive everywhere but it still lacks the quality."

As well as hitting yields, heavy rain last year led to mixed grain quality in the French harvest, making it less attractive to milling industry buyers.

Russian 11.5% wheat for April/May delivery was little changed at around $243-$245 a ton FOB with French prices about $2 a ton cheaper depending on Euronext moves, traders said. Ukrainian wheat was about $2-$3 cheaper than Russian.

The end of the Ramadan period this weekend and the Eid holiday period next week is likely to reduce demand from key Middle East and North African importers, traders said.

A Forecast for rain showers in the U.S. Plains and the Black Sea region were also weighing on the wheat market by easing concerns about this year's harvest.

"There is considerable rain forecast in the Black Sea region in coming days but also in the east EU, including the big production areas in Romania and Bulgaria," a German trader said.

Traders continued to monitor developments in a U.S.-backed initiative for a maritime truce in the Black Sea, as well as potential fallout for agricultural trade from U.S. tariffs.

In oilseeds, May rapeseed COMK5 rose to a three-week high at 522.25 euros a ton before settling at 521.00 euros, up 1.6%.

Talk of tighter short-term availability and a rally in U.S. soybean oil following a Reuters article about U.S. biofuel policy added impetus to rapeseed's rebound from a six-month low earlier in March, dealers said.

($1 = 0.9266 euros)