EU wheat lower as oil and euro weigh amid Iran ceasefire optimism

PARIS, April 1 (Reuters) - Euronext wheat slid around 2% on Wednesday, pressured by falling oil prices and a stronger euro as investors were buoyed by growing prospects for an end to the month-old Middle East war.

May milling wheat BL2K6, the most active position on Paris-based Euronext, was down 1.8% at 201.00 euros a metric ton by 1538 GMT, though it held above the psychological 200-euro threshold.

December futures BL2Z6, which have risen more sharply during the war given concerns about the potential impact of higher fertilizer costs on this year's harvest, were down 2.1% at 217.75 euros, retreating from a two-week peak struck on Tuesday.

Comments by U.S. President Donald Trump since Tuesday suggesting that Washington could soon halt its military operations against Tehran fueled optimism in financial markets around the possible de-escalation of a conflict that has severely disrupted global energy supply. MKTS/GLOB

Crude oil LCOc1 fell on Wednesday, while the euro EUR= climbed against a broadly weaker dollar. A stronger euro makes European grain more expensive for export.

"On Matif (Euronext), there is definitely a euro impact too," a futures dealer said.

Chicago wheat Wv1 dropped around 3%, breaking a six-session rally, as traders also assessed rain forecasts this week in drought-affected U.S. wheat belts. GRA/

In Germany, the large premium for new-crop December futures on Euronext versus May was encouraging farmers to consider the deferred position for selling stocks from last year's harvest, traders said.

“There is a decent volume of unsold German high-protein wheat, including 13% protein, which could not be exported because of tough Black Sea competition,” a German trader said.

“If fertilizer use is cut because of high prices, as in the start of the Ukraine war, this summer’s new crop could have lower protein levels but normal volumes. So old-crop high-protein wheat could be mixed with new crop to achieve required Euronext quality, enabling advanced sales into Euronext December,” the trader said.

In export markets, French, Russian and Ukrainian 11.5% protein wheat were all quoted around $258 to $259 a ton cost and freight (c&f) included for April shipment to Egypt, depending on Euronext and currency moves. Romanian crop was around $261.

An Egyptian buyer was seeking about 30,000 tons of Black Sea 11.5% wheat at about $260 a ton c&f for April/May shipment.

Meanwhile, financial investors reduced their net long position in Euronext wheat last week, data published by the exchange showed.