EU wheat subdued with rain relief and Mideast tensions in focus

PARIS, May 4 (Reuters) - Euronext wheat was little changed on Monday as forecasts of widespread rain in western Europe this week tempered drought concerns, while military tensions in the Strait of Hormuz underpinned prices, traders said.

September milling wheat BL2U6, the most-active contract on Paris-based Euronext, settled unchanged from the previous close on Thursday at 213.50 euros ($249.56) a metric ton.

Euronext resumed trading on Monday after a three-day closure that included Friday's Labour Day holiday in much of Europe.

Worries about crop stress in dry U.S. and European wheat belts had pushed Euronext September futures to a one-month high last Wednesday, before rain forecasts encouraged profit-taking ahead of the holiday weekend.

The latest weather charts point to significant precipitation this week across western Europe, on top of showers at the weekend. That includes France, where a very dry spring has started to weigh on crop conditions.

Sparse rainfall has also led to low water levels on Germany’s Rhine river, hindering freight shipping on an important route for grains and other commodities.

Chicago wheat Wv1 turned higher as worries about escalation in the Strait of Hormuz offset pressure from expected rain in parched parts of the U.S. Plains. GRA/

Investors grappled with diverging U.S. and Iranian accounts of the situation in the blockaded strait. Reports of attacks on the United Arab Emirates and a fire on a South Korean vessel unsettled the oil market. O/R

The U.S.-Iran conflict has supported grain markets because crops like corn are widely used for biofuel, while rising fuel and fertiliser prices could pressure harvest production.

Export activity in wheat remained tepid.

“Export demand is low as buyers hope some form of Iran peace agreement will cause prices to fall shortly,” a German trader said, adding importers were also factoring in large stocks of last year's crop that were priced well below new-crop levels.

“Algeria is expected to issue a tender for July shipment and Tunisia possibly June/July shipment, but high prices could cause a delay in tenders being issued,” the trader said.

In barley, traders noted two vessels were due to load around 60,000 tons of grain each in France for China, according to LSEG data. GRAIN/SHP/FR

The cargoes, the first French barley shipments to China in months, could be followed by a third in the coming weeks, traders added.

($1 = 0.8555 euros)