Euronext wheat hovers near lows

PARIS/HAMBURG, June 11 (Reuters) - Euronext wheat consolidated near contract lows on Wednesday as a favourable harvest outlook and weak export prospects hung over the market, traders said.

Reluctance to sell among both farmers unhappy at current prices and investors, who already have a large short position, helped underpin the market.

The run-up to a widely followed world crop report from the U.S. Department of Agriculture on Thursday also encouraged prices to consolidate.

September milling wheat BL2U5, the most-active position on Paris-based Euronext, was up 0.4% at 199.75 euros a metric ton by 1605 GMT.

The front-month position earlier set a new contract low at 198.00 euros, just below a previous low hit on Tuesday when prices breached the psychological 200 euro floor.

"The market is treading water today," a futures dealer said. "Farmers aren't selling and funds are already super short."

Financial investors trimmed their net short position in Euronext wheat last week but remained heavily short, data published by Euronext on Wednesday showed.

Euronext lacked clear direction from Chicago wheat Wv1, which edged down in U.S. trading to give up earlier gains. GRA/

Wheat prices came under pressure this week after the USDA raised its ratings for U.S. wheat crops, tempering concerns about rain damage in the run-up to harvesting.

Supply prospects have also been bolstered by a satisfactory crop outlook in top wheat exporter Russia and rain relief that has eased drought fears in northern Europe.

A hot spell in France was not causing major concern as it was expected to be relatively short, with storms forecast to move across the country by the weekend.

The heat may accelerate the maturing of winter barley, the first cereal crop to be cut in France at the start of summer, with early harvesting possible in the week ahead, traders said.

The generally favourable production outlook across the Northern Hemisphere was maintaining expectations of stiff export competition in the upcoming season.

“The market is shaping up for big exports from the Black Sea, especially Russia from this summer," one German trader said. “Euronext will have to do its job of creating low enough EU prices to find export demand and I think a break well below the 200 euro level is needed.”