EU wheat recovers from lows as euro eases, Chicago rebounds

PARIS, July 2 (Reuters) - Euronext wheat edged up on Wednesday in a slight bounce from contract lows, supported by an easing in the euro and further recovery in Chicago prices.

Gains were modest though as a favourable outlook for the northern hemisphere harvest and weak export prospects for western European wheat hung over the market, traders said.

September wheat BL2U5 settled 0.6% up at 195.75 euros ($230.73) per metric ton.

On Tuesday it fell to a contract low at 192.75 euros before paring losses as Chicago wheat Wv1 rallied.

Chicago futures extended gains on Wednesday, with traders citing adjustments by investors with large short positions ahead of Friday's market closure for U.S. Independence Day. GRA/

The euro EUR= eased after reaching a 3-1/2 year high against the dollar on Tuesday. FRX/

The euro's strength has dampened export sentiment.

“The Black Sea region, with Ukraine cheapest, is dominating export markets, with demand anyway thin,” one German trader said. “Importers increasingly expect good harvests in the Black Sea and EU, which could weaken prices.”

Traders noted Egyptian private importer demand for 25,000 tons of Ukrainian 11.5% protein wheat for July/August shipment at around $236-$237 a ton cost and freight included (c&f). Trade estimates of comparative French c&f prices to Egypt were around $247-$249, depending on Euronext and exchange rate moves.

"Merchants don't have much in their books by way of export sales," a French trader said. "At the same time, they're struggling to find producers to sell them grain for this summer, so physical premiums are rising."

Polish farmers were also baulking at current prices.

Polish export prices for new-crop 12.5% protein wheat for August port delivery fell about 80 zloty in the past week to around 805 zloty (189.3 euros) a ton.

“Polish farmers reject any business at this low price,” one Polish trader said.

“Wheat weather has been pretty ideal in the last two weeks so harvest optimism is rising. Meanwhile, large scale export demand for Polish wheat is still absent, but some old-crop shipments are taking place, mainly to Africa.”

Recent wheat shipments from Poland include 50,000 tons for Ghana, 30,000 tons for Angola, 23,000 tons for elsewhere in Africa and three vessels totalling 85,000 tons for undisclosed destinations, traders said.

Traders remained relaxed about the impact of a heatwave in parts of Europe, with most wheat not at vulnerable growth stages and hot weather speeding up early harvesting.

($1 = 0.8484 euros)