EU wheat retreats to contract lows as weather and exports weigh

PARIS, May 27 (Reuters) - European wheat futures fell for a fourth day on Tuesday to trade around contract lows as easing weather concerns and slow exports kept the market under pressure.

September milling wheat BL2U5, the most active position on Paris-based Euronext, settled 2.1% down at 201.25 euros a metric ton, after equalling a contract low of 201.00 euros struck on May 13. December wheat BL2Z5 lost 2.3% to settle at 212.25 euros after nearing a contract low of 211.25 euros from May 8.

Chicago wheat futures Wv1, which resumed trading after Monday's U.S. Memorial Day holiday, fell more sharply as the market faced additional pressure from a rebound in the dollar index. GRA/

Wheat futures rallied early last week as concerns over adverse weather in Russia and China encouraged short-covering by speculators. But traders have since played down the risk of significant crop damage while weak export demand has also cooled the market.

"I can't see any major crop risks, unless there's a heatwave in June in one of the zones where moisture is low," a futures dealer said.

The European Union's crop monitoring service MARS on Monday increased marginally its outlook for this year's soft wheat yield in the EU, citing beneficial rain in southern Europe and limited effects so far from a prolonged dry spell in northern Europe.

Rain relief forecast in northern Europe and in drought-hit cropping regions in China, as well as an upgraded production estimate for Russia, have also tempered worries about the harvest outlook.

“Import demand remains very quiet, with no wheat purchase tenders issued so far this week,” one German trader said. GRA/TEND

“Russia and the Black Sea have a strong price advantage over the west EU for the new crop."

Russian 11.5% wheat for July shipment was around $223-$226 a ton FOB, about $10 a ton cheaper than French depending on Euronext and currency moves, traders said. Romanian wheat was about $2 a ton below Russia's. Ukrainian new crop was even cheaper around $218-$221 a ton FOB.

Weekly EU data showed soft wheat exports from the bloc so far in 2024/25 had reached 18.81 million tons, down 34% from a year ago albeit with some data missing from several member countries.