EU wheat slips as China-fuelled rally fades

PARIS, Nov 6 (Reuters) - Euronext wheat fell on Thursday in step with Chicago futures as limited Chinese purchases of U.S. crops cooled optimism about a trade truce and led traders to view a rally to multi-month highs as overdone.

December wheat BL2Z5, the most active contract among Euronext's Paris-based futures, settled 1.2% down at 192.00 euros ($223.91) a metric ton.

The front-month position was moving away from a two-month high of 195.50 euros on Wednesday.

Chicago wheat Wv1 dropped more than 3% to retreat from a near four-month peak a day earlier. GRA/

China has booked two cargoes of U.S. wheat since last week's trade truce, according to traders, a smaller volume than speculation of several hundred thousand tons.

"There was no reason for U.S. wheat to rally so much when Black Sea prices have remained stable," a futures dealer said.

"With the dollar rising this week too it didn't make sense to have such a rally on wheat and soybeans."

The absence of large Chinese purchases has put attention back on tepid overall international demand and stiff competition from Argentine and Black Sea supplies.

"There is still a lack of general importer demand for wheat with hardly any purchase tenders issued," a German trader said. GRA/TEND

Cheap sales offers of new crop Argentine wheat well below EU prices were also visible in the Moroccan market, the main overseas destination for European wheat.

In Germany, wheat exports were also being hampered by the reluctance of farmers to sell at current Euronext prices, the trader said.

However, German farmers were active sellers of barley and rapeseed, helping export business like a 30,000-ton shipment of German barley loaded this week for Turkey, he said.

Traders noted some internal EU feed-wheat demand. Buying interest from northern Spain was seen for about 8,000 tons and for 7,000 tons from Ireland, both at around 210 euros a ton cost and freight included (c&f) for November/December shipment.

($1 = 0.8575 euros)