EU wheat hits contract lows as euro and Argentina dent export prospects

PARIS/HAMBURG, Dec 16 (Reuters) - Paris wheat futures extended losses on Tuesday to hit contract lows as strength in the euro and competition from cheaper Argentine supply hurt European export prospects.

March wheat BL2H6, the most active contract on Paris-based Euronext, was down 0.9% by 1708 GMT at 186.00 euros ($218.85) a metric ton, a contract low.

“There is pressure from heavy export competition, especially cheap Argentine supplies, and a firmer euro,” one German trader said.

The euro EUR= rose to its strongest against the dollar since September, making western European grain more expensive overseas. FRX/

The harvesting of what is forecast to be a record wheat crop in Argentina continued to weigh on prices.

Chicago wheat Wv1 fell more than 2% in U.S. trading. GRA/

Farm office FranceAgriMer cut its forecast for French soft wheat exports outside the European Union in 2025/26, citing Argentine competition, but it raised its outlook for intra-EU shipments on feed demand.

Argentine 11.5% protein wheat was way below EU competitors on Tuesday at about $208-$212 a ton FOB for January/February shipment.

Russia was the cheapest European origin with Russian 11.5% protein wheat at about $224-$226 a ton FOB. French was close to Russian after recent Euronext weakness while Ukrainian and Romanian wheat were quoted in a similar range at $228-$231 a ton FOB.

Wheat prices were also pressured by rising expectations of a ceasefire in Ukraine after U.S. and European negotiators reported progress in talks on Monday.

"You have a potential Russia-Ukraine peace accord that wouldn't change that much in exports but could reduce shipping costs for Black Sea origins and make them more competitive," a futures dealer said.

Weekly EU data showed the bloc's soft wheat exports so far this season were down 2% from a year ago, though figures for some countries, including France, remained incomplete.

In Poland, end-of-year short-covering by mills pushed up prices for 12.5% protein wheat by about 10 zlotys on the week to around 810 zlotys (191.7 euros) a ton for near-term delivery, traders said.

Current Polish wheat export shipments in Gdansk/Gdynia include a ship loading 33,000 tons for Morocco, two ships each loading 33,000 tons for unknown destinations. One ship had just sailed with 33,000 tons of wheat to Guinea and another with 45,000 tons to Ivory Coast.

In Szczecin, a ship is loading 33,000 tons for North Africa.

($1 = 0.8499 euros)