Hesitant EU wheat market weighs Russian supply

PARIS/HAMBURG, Aug 20 (Reuters) - Euronext wheat ended slightly lower on Wednesday at contract lows, giving up earlier gains as rising expectations for Russia's harvest offset concerns about slow Russian exports and uncertain progress towards ending the war in Ukraine.

December wheat BL2Z5, the most-active position on Paris-based Euronext, settled 0.3% down at 193.25 euros ($225.31) a ton, a session low that equaled Tuesday's life-of-contract low.

Chicago wheat Wv1 rose with support from a weaker dollar, but pared an earlier rise. GRA/

Consultancy Sovecon raised slightly its Russian wheat harvest forecast but at the same time cautioned that it will take time to deliver wheat to Russian ports from inland regions with good harvest volumes.

A slow start to Russia's export campaign has contributed to a run of French export sales, including to Egypt, Tunisia and Thailand. GRAIN/SHP/FR

Traders are watching to see when export competition from Russian wheat may increase.

Russian 12.5% protein wheat for September shipment was quoted moderately weaker at around $237-$241 a ton FOB on Wednesday, but with buyers seeking much lower prices around $236 a ton, traders said. Russian 11.5% protein wheat was around $233-$236.

"Russian prices are dipping slightly with more farmer selling but not the heavy falls in prices normally expected in Russia after the harvest," a German trader said, adding that some see sharper falls occurring later this month.

Traders were also assessing chances for talks under the aegis of U.S. President Donald Trump to end the war in Ukraine.

Investors turned more cautious on Wednesday about a possible resolution of the conflict between Russia and Ukraine, both major grain exporters through the Black Sea.

In Germany, dry, sunny weather enabled farmers to make rapid progress in the final stages of the wheat harvest, with traders expecting work to be generally finished this week.

A big crop is expected, although up to 30% could be feed quality after repeated summer rain.

Uncertainty over quality was making farmers cautious about selling, though the large harvest volume was expected to produce sufficient supply of milling wheat for export and domestic markets, traders said.

In France, updated results from a harvest quality survey showed the share of soft wheat with at least 11% protein remained below last year's level but test weights continued to be much higher, farm office FranceAgriMer said.

Financial investors extended their net short position in Euronext wheat last week, data showed.

($1 = 0.8577 euros)