EU wheat eases after short-covering wave as export concerns linger

PARIS, May 22 (Reuters) - Euronext wheat fell on Thursday from a one-month high as a short-covering wave subsided and attention shifted back to favourable harvest prospects and stiff export competition.

Benchmark September milling wheat BL2U5 on Paris-based Euronext was down 1.3% at 209.25 euros a metric ton by 1502 GMT. On Wednesday, it had climbed to 213.00 euros, its highest since April 17, as it rebounded from a contract low of 201.00 euros last week.

Chicago wheat Wv1 also moved back from a one-month peak. GRA/

Adverse weather in Russia and China and an unexpected decline in U.S. wheat ratings fuelled covering of short positions after last week's lows, but traders played down the risk of significant immediate losses to Northern Hemisphere crops.

Consultant Sovecon raised its 2025 Russian wheat production forecast to 81 million metric tons from 79.8 million tons, though it warned that persistent dryness in many regions could still cause crop losses.

The rally on Euronext, together with news that Russia has dropped a minimum grain export price for May and June, has meanwhile cooled hopes of renewed demand for Western European wheat after the recent price lows.

"With the rally on Euronext the price pendulum has swung back towards Russia," a French trader said.

Russia, the world's biggest wheat exporter, has removed a minimum wheat price recommendation for the end of the season, market sources told Reuters, with one saying the minimum price recommendation for May and June had initially been $250 a ton.

“This is bad news for the EU but import demand is as good as dead, so lack of demand will be the main factor braking Russian sales,” one German trader said. “But it would give Russian exporters more freedom to openly offer cheaper prices in any international tenders in coming weeks.”

Traders said Russia's move also suggested the country may loosen export regulations for the new season starting in July, which could reinforce Russia's competitiveness after it was already well-placed in Algerian and Saudi new-crop tenders this week.GRA/TEND

Price impetus on Euronext has also been curbed by rain moving towards dry plains in Northern Europe. Showers fell in parts of northern France on Wednesday and rain is forecast more widely across Northern Europe in the week ahead, though traders were monitoring how much moisture reached the most parched crop belts.