Euronext wheat eases after weather-fuelled flurry

Euronext wheat turned lower on Tuesday as a short-covering run led by front-month futures subsided and the market waited for a clearer picture of the impact of adverse crop weather.

September wheat (BL2U4), the most active contract on Paris-based Euronext, was down 0.7% at 221.50 euros a metric ton by 1611 GMT after reaching its highest since late January at 226.75 euros.

May futures (BL2K4), which expire on May 10, again had the biggest moves. The front-month position was down 3.3% at 208.50 euros, retreating from a near three-month top of 219.25 euros hit in morning trade.

A rise in the euro against the dollar after a recent slide, and a paring of gains in Chicago wheat ZW1! also encouraged Euronext to consolidate.

Euronext had climbed around 4% on Monday as concern over dry weather in Russian and U.S. winter wheat belts, as well as a cold spell in parts of Europe, fanned covering by participants holding short positions.

"The market is stabilising in the absence of fresh news," one futures dealer said. "But the situation isn't great in Kansas and Oklahoma while you have funds that are very short in Kansas wheat futures."

A U.S. crop report on Monday showed a sharper-than-expected decline in the condition of U.S. winter wheat last week, including steep falls in major production states Kansas and Oklahoma.

In Europe, traders expected limited risks to wheat crops from frosts this week, with flowering rapeseed plants considered to be more vulnerable.

"I do not think frost damage is expected to Germany's wheat, despite plants being about two weeks ahead of normally expected growth following warm weather in April," one German grains analyst said.

"But local damage cannot be ruled out to rapeseed in some parts of east and southern Germany, including close to the border with the Czech Republic, where frosts were deeper."

In Poland, weather concern was also focused on rapeseed in part of the country.

"Areas of south Poland had frosts of between minus 6 to minus 7 degrees and with rapeseed fully flowering there must be concern that some significant damage has been suffered in Poland," one Polish trader said.

"Wheat and other grains seem not to have been hit."

European Union grain export and import data was postponed for a third consecutive week due to a persisting technical problem.