UPDATE 1-European wheat futures ease, eyes on USDA report

(Adds Benelux, updates prices)
AMSTERDAM, Feb 7 (Reuters) - European wheat prices fell on Tuesday
after hitting a new high in almost eight months, with traders saying adjustments
by funds were driving the market in the run-up to closely watched U.S.
government crop estimates this week.
* March milling wheat on the Paris-based futures market was down
1.75 euros or 0.7 percent at 220.50 euros a tonne by 1648 GMT, after briefly
hitting 223.50 euros in opening trade, a level last seen on the contract on June
15.
* A fall in Chicago wheat futures contributed to the downbeat tone in
Europe.
* But traders stressed Paris trading was marked by fund activity, which
meant the European market trimmed its losses during the afternoon even as the
euro rose sharply.
* "There are funds coming in and out of the market. Commercial operators
aren't there today," a French futures dealer said.
* The hesitant trend partly reflected caution ahead of Thursday's monthly
crop estimates from the U.S. Department of Agriculture, traders said.
* The risk to crops from freezing conditions across Europe remained an
underlying support for the market but the threat was priced in for now,
operators said.
* "So far, however, the obvious frost damage should be moderate in the EU,
though fears of whether this will remain the case will continue to keep the
market on tenterhooks," Commerzbank analysts said.
* Weather forecaster Meteo France expects temperatures to remain at around
-8 to -12 in the key wheat producing regions in central and northeast France
until the end of the week.
GERMANY
* German wheat dropped in line with the fall in Paris coupled with reduced
fear about crop damage from the current bitterly cold weather.
* Background support was coming from ice disrupting shipping on some inland
waterways, traders said.
* Standard quality milling wheat for February delivery in Hamburg was
offered for sale down two euros at 220 euros a tonne with buyers at around 218
euros.
* "Overall people are still pretty relaxed about the impact of the cold
weather on German crops although there could be problems in parts of east
Germany and in Poland," one German trader said.
* "Temperatures in Germany have been low but the varieties of grain seeds
now cultivated have a high level of resistance to cold. It is too early to press
the panic button because of cold weather in Germany."
* Another trader added: "As long as temperatures stay low during the daytime
people are still expecting grain plants to come through the current cold snap
without damage. A daytime thaw coupled with deep overnight frost would be very
dangerous."
* Germany had temperatures of between minus 12 to minus 15 Celsius in grain
regions on Monday night with lows of minus 21 degrees in isolated east German
areas.
* Double-digit frosts but with daytime temperatures under freezing point are
forecast up to Saturday in Germany.
* The deep frosts have caused some canals and rivers to freeze up including
the Danube, although the Rhine and ocean ports are functioning normally on
Tuesday.
* "The river Elbe east of Hamburg is frozen which has caused disruption to
shipments of grain to the port and sparked some short-covering," another trader
said.
* Strong demand from makers of animal feed kept German feed wheat prices
close to milling wheat in parts of the country, a pattern seen in past weeks,
but feed wheat was starting to be quoted below milling levels.
* Feed wheat for nearby delivery in the South Oldenburg market near the
Netherlands was offered for sale at 217 euros a tonne, with buyers at around 215
euros.
* Traders said Russian and Ukrainian feed grain prices were firm and some
demand for feed grain was switching back to the EU.
* "Feed makers are mostly seeking supplies for immediate spot delivery," the
second trader said. "Feed makers could be hit by the freeze up on the Danube,
which will prevent grains from east Europe being shipped to the west."
BENELUX
* Dutch and Belgian feed wheat prices were between one and six euros per
tonne higher compared to last week, traders said.
* Dutch feed wheat for deliveries in March was traded at 214 euros a tonne,
while new crop for September to December deliveries was traded at 196 euros a
tonne.
* In Belgium, February and March contracts were traded at 215 euros a tonne
while new crop for August through December deliveries was traded at 195 euros a
tonne.
* "Consumers are holding back," one trader said. "Everyone is focused on cold
weather."

* Prices as of 1730 GMT

Product Last Change Pct Move End 2011 Ytd Pct

Paris wheat 214.75 0.50 +0.23 195.25 9.99
London wheat 170.00 1.50 +0.89 153.65 10.64
Paris maize 209.00 -1.50 -0.71 197.25 5.96
Paris rape 432.00 -1.25 -0.29 421.50 2.49
CBOT wheat 676.50 -3.25 -0.48 671.25 0.78
CBOT corn 649.75 -1.50 -0.23 654.75 -0.76
CBOT soybeans 1242.25 0.25 +0.02 1207.75 2.86
Crude oil 98.61 1.70 +1.75 98.83 -0.22
Euro/dlr 1.33 0.06 +4.36 1.30 2.33
* All grain and oilseed prices for second position. Paris futures prices in
Euros per tonne, London wheat in pounds per tonne and CBOT in cents per bushel.

(Reporting by Sybille de La Hamaide and Valerie Perent in Paris, Michael Hogan
in Hamburg and Ivana Sekularac in Amsterdam; editing by James Jukwey)