EU wheat rebounds from lows as short-covering, euro support

PARIS, Aug 21 (Reuters) - European wheat futures rose on Thursday to recover from contract lows, supported by short-covering and weakness in the euro that underscored the export competitiveness of French supplies.

A rally in Chicago corn Cv1, after bigger than expected weekly U.S. export sales, also lent support to wheat markets. GRA/

December wheat BL2Z5, the most-active position on Paris-based Euronext, settled 1.3% higher at 195.75 euros ($227.27) a ton, recovering from a life-of-contract low of 193.25 euros touched in the previous two sessions.

September wheat BL2U5 closed up 1.7% at 197.25 euros a ton, after touching a three-week peak at 199.00 euros, with dealers citing more short-covering in the soon-to-expire front-month position.

The euro EUR= fell against the dollar, as investors positioned ahead of a closely-watched speech on Friday by U.S. Federal Reserve head Jerome Powell. FRX/

The currency weakness maintained the attractiveness of French wheat, which has notched up a run of exports amid slower than usual shipments from Russia.

Russian 11.5% protein wheat was around $232-$235, about $2 dearer than French supplies, according to traders.

“So French wheat is still in with a chance for more sales to the likes of Egypt and Morocco,” a German trader said.

Sellers in Russia, meanwhile, were resisting price pressure, with buyers seeking cheaper offers.

Russian 12.5% protein wheat for September was around $237-$240 a ton FOB on Thursday, but with buyers seeking much lower prices around $235-$236 a ton, traders added.

However, rising estimates of Russia's harvest have reinforced expectations of ample global supply this season.

"Nearby European premiums may persist, but overall the market feels oversold rather than fundamentally bullish," British merchant ADM Agriculture said in a note.

In Germany, traders were seeking markets for the larger volume of feed wheat expected from this summer’s large but partly rain-damaged German crop.

“The feed wheat is likely to be sold inside Germany itself or inside the EU, including to the Netherlands and Spain. I think the feed wheat will be sold easily,” another trader said, adding the big harvest should still provide sufficient milling wheat.

($1 = 0.8613 euros)