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Euronext wheat eases after rally but still posts weekly gain

Grain is harvested amid a heatwave in Germany

PARIS (Reuters) - Euronext wheat eased on Friday after a three-day rally but still posted its first weekly gain in a month as traders set competition from cheaper Black Sea supplies against risks from the ongoing war in Ukraine.

March wheat on Paris-based Euronext settled 1% lower at 286 euros ($310.74) a tonne, showing a slight 0.4% rise over the week.

The contract had slipped to an 11-month low on Monday before rebounding as traders saw the market as technically oversold while news headlines drew attention back to the conflict in the Black Sea zone.

Rumours of renewed demand from Morocco, the biggest export destination for European Union wheat so far this season, and an upturn in weekly U.S. wheat export sales also supported futures.

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"Wheat markets staged some recovery as the Ukraine war rose back up the agenda," consultancy CRM Agri said in a note.

"With the euro's strengthening trend against the dollar tailing off too, Paris wheat put in its first positive week since Christmas."

Wheat production in Ukraine may not exceed 16 million tonnes in 2023, marking a second annual decline as farmers cut planting due to the impact of Russia's invasion, a Ukrainian grain sector group said on Thursday.

A U.S. Department of Agriculture (USDA) official, meanwhile, said the agency sees Russia's official estimate of the country's wheat crop as too high.

However, wheat remained curbed by corn and soybean markets, which have been pressured by improved rainfall in Argentina, and continuing exports of Russian and Ukrainian wheat.

“Cheap wheat from Russia and Ukraine in FOB terms looks likely to cover the main export demand from the key Middle Eastern and North African importers,” one German trader said.

The origins remained competitive despite increased ship insurance costs and a backlog of vessels using a Black Sea corridor from Ukraine, traders said.

Standard 12% protein wheat for February delivery in Hamburg was offered for sale at a premium of about 11 euros over the Euronext March contract but with little purchase interest seen.

($1 = 0.9204 euros)

(Reporting by Gus Trompiz in Paris and Michael Hogan in Hamburg; Editing by Kirsten Donovan)