Euronext wheat slips back to lows as euro surges

PARIS/HAMBURG, Aug 22 (Reuters) - Euronext wheat futures fell on Friday, with benchmark prices equalling a contract low, as a jump in the euro against the dollar following remarks by the U.S. Federal Reserve's chief made European grain less competitive overseas.

Prices were also consolidating after a rally on Thursday fuelled by short-covering in front-month futures and further talk of export demand for French wheat.

December wheat BL2Z5, the most-active position on Paris-based Euronext, was 0.8% down at 194.25 euros ($227.64) a metric ton by 1606 GMT, after equalling a life-of-contract low of 193.25 euros touched earlier this week.

Some deferred positions set new contract lows.

Front-month September wheat BL2U5 edged down 0.1% to 197.00 euros a ton, easing from a three-week peak of 199.00 euros on Thursday.

The euro EUR= surged against a sliding dollar as Federal Reserve Chair Jerome Powell hinted at a possible interest rate cut next month during a keenly anticipated speech. FRX/

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

Scepticism over market talk that Chinese buyers were looking to buy French and U.S. wheat also removed impetus from prices.

"It's market rumour. China is always more or less tracking prices. It would be surprising for them to buy U.S. wheat just before a big U.S. corn crop comes in," a futures dealer said.

Traders were also watching to see if an advancing Russian harvest would push prices lower and generate more export activity.

Russian 12.5% protein wheat was on Friday around $237-$240 a ton FOB for September shipment, but with buying interest much lower at around $233 a ton FOB, traders said.

“Buyers continued to hold out for lower prices in expectation Russian farmers will sell more of their crop in a matter of days,” a German trader said.

In the European Union, large supplies of feed wheat after summer rain damaged harvests in Germany and the Baltic States generated feed-wheat export sales, traders said.

“I estimate Lithuania’s harvest will involve 20%-25% feed wheat against 10%-15% normally. In Latvia, percentage of feed wheat may exceed 45%-50%,” a Lithuanian trader said.

The lower harvest quality was opening sales opportunities in major Asian feed markets, with talk of a large recent sale to Thailand and more Asia deals expected, he added.

($1 = 0.8533 euros)