EU wheat ends May quietly after weather-fuelled rally

PARIS, June 1 (Reuters): Euronext wheat ticked up on Friday, consolidating after a volatile month during which prices surged on the back of deteriorating harvest prospects in leading exporter Russia.

September wheat on Paris-based Euronext settled 0.3 per cent higher on the day at 259.25 euros ($281.16) a tonne.

Over May, the contract posted a 14 per cent gain, though it ended the month well below a one-year high of 269.25 euros struck on Monday.

"Russia's lack of rainfall and depleted soil moisture in key growing areas is widely being discussed in all corners of the global market," consultancy CRM Agri said in a note.

Analysts have cut Russian wheat harvest estimates by around 10 million tonnes this month due to dryness and frosts, unsettling a market that has become used to massive production and exports from the country.

Forecasts of rain in Russia helped curb prices towards the end of the week, though with temperatures rising analysts were cautious about the benefit.

Higher Russian prices have created hopes of export demand for German and other Baltic region wheat. There was market talk of Russian exporters inquiring about EU wheat to replace Russian supplies earmarked for Saudi Arabia.

However, EU prices were still relatively high and demand thin, with recent prices deterring importers.

"Export demand remains quiet, with few tenders in the market, while cheap Ukrainian wheat continues to get internal EU sales," a German trader said.

Russian 12.5 per cent protein wheat for June Black Sea shipment was little changed from Thursday at around $252 a ton FOB, up $2 since Monday.

German 12.5 per cent wheat for June shipment was much higher at just over $270 a ton FOB despite negative differentials of 6 to 7 euros under Euronext September, traders said.

Traders said large handysize sea consignments of Ukrainian feed wheat for June were offered to importers in north Spain at around 234 euros c&f, equivalent to differentials of 31 euros c&f under Euronext September.

Ukrainian new crop 11 per cent wheat was purchased by north Italian buyers this week at 235 euros a ton including delivery by train.

In France, the condition of soft wheat worsened again last week, data from farm office FranceAgriMer showed, and traders were assessing the risk of a further deterioration during heavy rain this week before a sunny spell forecast for next week.