EU wheat drops below 200 euros as ample supplies offset Russian cut

PARIS, July 23 (Reuters) - European wheat slipped below 200 euros a ton on Wednesday as ample global supplies outweighed reduced Russian crop estimates while traders watched for rain-related quality risks in Germany.

Benchmark September milling wheat BL2U5 on Paris-based Euronext was down 1.9% by 1600 GMT to 199.00 euros ($233.77) a metric ton.

The most-traded wheat contract Wv1 on the Chicago Board of Trade was down 1.2% by the same time.

Initial results from a North Dakota crop tour showed above-average hard red spring wheat yields in the southern part of the top-producing state after ample summer rains, though yields are below last year’s record.

Meanwhile, France's soft wheat crop is expected to bounce back from year-ago lows, while India's wheat inventories rose to a four-year high this month.

"There was some support yesterday by the lower Russian estimates but it didn't last. The Russian crop will still be big. It does not change the feeling that there is plenty of wheat out there," a trader said.

Traders were keeping an eye on the German wheat harvest, however, which has been halted by widespread rain.

"The rain is highly unwelcome at a time Germany’s wheat is ripe and ready to be harvested," one German trader said. “We really need a period of sunny, hot weather to dry out crops to enable harvesting to continue."

More rain is forecast in the coming days, and traders are concerned about last-minute quality loss before the wheat harvest can be gathered. Rain has been especially heavy in Mecklenburg-Vorpommern, a key export region.

Traders welcomed demand from Tunisia, which bought 100,000 tons in a tender, but the Black Sea is tipped as the main supply source.

Traders said Russian 11.5% protein wheat for August shipment was around $237-$240 a ton FOB, only around $1-2 below French depending on Euronext and euro moves.

Ukrainian wheat was well below the West EU at around $232-$235 a ton and Romanian around $235-$237. Russian 12.5% protein wheat reached $242-$244 a ton.

Non-commercial market participants extended their net short position in Euronext's milling wheat futures and options in the week to July 18, data published by Euronext on Wednesday showed.