EU wheat edges back from 2-week top after USDA report

PARIS, July 11 (Reuters) - Euronext wheat closed slightly lower on Friday as widely followed U.S. government crop forecasts threw up few surprises, encouraging prices to consolidate after a two-week high fuelled by export delays in Russia.

September wheat BL2U5 on Euronext settled 0.1% down at 201.00 euros ($234.99) a metric ton.

It earlier reached its highest since June 24 at 202.75 euros, surpassing a previous two-week peak from Thursday when the contract climbed more than 2%.

The front-month futures have rebounded from a contract low of 192.75 euros in the past week amid covering of short positions.

Dealers also noted that the discount for September against December futures BL2Z5 was steadily narrowing, which may prompt farmers to sell more grain after holding back as nearby prices went below their production costs.

Chicago wheat Wv1 fell after the U.S. Department of Agriculture's monthly supply and demand outlook , which forecast a slightly bigger U.S. crop than anticipated.

In Russia, the government has ordered measures to boost agricultural exports as July wheat shipments are set to be their lowest since 2008, a trend traders said reflected a supply squeeze due to a late harvest and slow selling by farmers.

The snags in Russia, and talk of similar issues in other Black Sea exporting countries, fuelled speculation that merchants could turn to French wheat to cover exports.

“In the case of short-covering to deliver on actual needs, you cannot rule out alternatives being sought in other countries - and France has physical supplies available with the harvest well under way,” a German trader said.

“France and the Baltic States could supply 11.5% protein, and 12.5% could come from Romania or the Baltic states, but I have not seen any actual trades.”

Traders said feed wheat destinations such as Thailand might make sense for French supplies amid reports of protein content in early French crop struggling to meet milling standards of 11% and above.

But traders cautioned there was no clear evidence of switching, while they played down chatter that Chinese buyers were seeking to buy French crop.

There was also the expectation that any supply squeeze in Russia would be brief as harvesting accelerates.

Russian 11.5% protein wheat for August shipment was up about $2-$3 a ton at around $223-$225 a ton FOB, still around $6-$7 cheaper than French, depending on Euronext and exchange rate moves.

($1 = 0.8554 euros)