Euronext wheat rises on short-covering, exports

PARIS, Aug 14 (Reuters) - Euronext wheat rose on Thursday to extend a rebound from contract lows, supported by short-covering in front-month futures and expectations of export demand for French wheat.

September wheat BL2U5 on Paris-based Euronext settled 1.3% higher at 197.00 euros ($229.23) a metric ton, moving away from a contract low of 192.50 euros struck twice this week.

December futures BL2Z5 ended 1.0% higher at 197.75 euros a ton, recovering from Wednesday's contract low at 194.25 euros.

Euronext also drew support from a sharp fall in the euro EUR= against the dollar, with corresponding strength in the U.S. currency keeping Chicago wheat Wv1 near a five-year low. GRA/

While supply pressure from large expected harvests has hung over wheat markets, impetus to close large short positions in Euronext September futures helped support the front month and erase what had been a heavy discount compared with December.

Dealers said the recent discount on September futures contributed to interest in French wheat for export, as merchants seek alternative supply in the face of tight early-season availability in the Black Sea export zone.

There has been unconfirmed market talk of interest in French supplies for Egypt and Asian destinations including Thailand and Bangladesh.

However, despite a good harvest, France like other European countries is seeing limited selling by farmers unhappy at low prices, which dealers said could lead some merchants to take physical delivery of wheat when the Euronext September contract expires.

The soft wheat harvest in France was virtually completed last week, with 99% of the crop cut, according to data from farm office FranceAgriMer.

In Germany, the association of farm cooperatives, DRV, raised its estimate of this year's wheat crop to 22.42 million metric tons from 21.56 million in July, suggesting summer rain did not cause as much late damage to crops as feared.

A public holiday on Friday in some European countries, including France, may add to a summer lull in trading, though the expiry of options against September futures at the end of the session may generate more short-covering on Euronext, dealers said.

($1 = 0.8594 euros)