EU wheat flat, torn between strong euro and spike in Chicago

PARIS/HAMBURG, Jan 22 (Reuters) - European wheat was mostly flat on Thursday, supported by a sharp rise on U.S. markets but capped by the euro strengthening against the dollar and competition from Argentine and Russian wheat in some key markets.

Front-month March milling wheat BL2H6 on Paris-based Euronext was unchanged by 1655 GMT at 189.25 euros a metric ton. Chicago wheat Wv1 was up 1.5%.

Grain markets have been underpinned by relief across financial markets after U.S. President Donald Trump stepped back from threats to impose tariffs against European allies and flagged a deal to end a dispute over Greenland. MKTS/GLOB

On the wheat supply side, consultancy Sovecon said on Thursday it could cut its forecast for Russia's crop this year from the current 83.8 million metric tons if a cold spell across the country persists for a week or longer.

"Sovecon is closely monitoring an abnormal cold pattern in Russia. A downward revision cannot be ruled out if temperatures of minus 20 Celsius to minus 25 degrees Celsius persist for a week or longer," the consultancy said.

But demand continues to be pressured by competition from Argentine and Russian origins, notably in Morocco.

"The European Union is rather looking to be on the sidelines, and even Romanian wheat is looking expensive following recent heavy sales," a German trader said.

However, there are hopes that the need to source the large volume of Argentine wheat bought in Algeria's tender on Monday could support Argentine prices, he said.

Meanwhile, the weather in Russia at this time of the winter could cause delays to export shipments with perhaps the chance of some short covering in the EU.

Egyptian buyers this week were still focusing on Russian supplies for February shipment, but attacks on Russian and Ukrainian shipping increased costs for ship insurance.

This could help French wheat's competitiveness in cost and freight terms to Egypt, the trader said.