EU wheat hits one-month low as export competition weighs

PARIS/HAMBURG, Nov 21 (Reuters) - Euronext wheat fell to a one-month low on Friday as traders remained cautious about Chinese purchases of U.S. crops and focused on export competition in a well-supplied wheat market.

March wheat BL2H6 on Euronext settled 0.4% down at 192.00 euros ($220.90) a metric ton, after reaching its lowest since October 22 at 190.50 euros.

Front-month December wheat BL2Z5, less active after the expiry of its options, dropped to a one-month low at 187.75 euros before steadying to close up 0.3% at 189.75 euros.

Bumper crops being harvested in Australia and Argentina are set to further swell global wheat supply, stiffening competition for European wheat already faced with strong Russian shipments.

“The EU is facing hard competition from the Black Sea in export markets, with Russia holding a price lead in some North African markets including Egypt,” a German trader said.

Russian 11.5% protein wheat for December shipment to Egypt was around $247-$248 a ton, cost and freight (c&f) included, he said.

French, Russian Ukrainian and Romanian were all around $251-$252 a ton c&f Egypt, depending on exchange rate and currency moves.

Market talk is that Russia has shipped around 550,000 tons of wheat to Egypt so far in November, along with 530,000 tons to Turkey, taking a firm hold on the two important markets.

A Turkish buyer was seeking about 30,000 tons of Black Sea 11.5% protein wheat for November/December shipment at around $250 a ton c&f. A Benelux buyer was also seeking 25,000 tons of 11.5% from Ukraine for November/December shipment to Dutch or Belgian ports at around $258 a ton.

Slow farmer selling and demand to fill a steady export loading programme were nonetheless underpinning nearby prices in western Europe.

"Exporters don't want to drop their guard," a French trader said. "But we're not lagging in shipments so far this season, which is positive given the absence of Algerian demand."

Conditions for recently sown wheat and barley in France remained very favourable and traders said frosts this week should not pose risks.

Farm office FranceAgriMer estimated that 98% of soft wheat and winter barley were in good or excellent condition by Monday, unchanged from a week earlier, as farmers wrapped up sowing.

"It's been a very quick sowing campaign in very good conditions," the French trader said. "We have very high potential for next year's harvest."

($1 = 0.8692 euros)