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UPDATE 1-EU wheat reaches contract high on US heat worry
(Adds afternoon trade, comment)
HAMBURG, July 4 (Reuters) - European milling wheat futures reached new contract highs on Wednesday on spillover support from a dramatic U.S. price rally as hot weather scorches American grain belts, but a holiday closure of U.S. markets curbed gains in Paris.
* Hot, dry weather causing stress to U.S. corn crops remained the focus of EU grain markets, along with poor grain harvest outlooks in the Black Sea which may push Russia out of export markets.
* Europe's benchmark milling wheat, the Paris November contract, closed up 1.75 euros, or 0.7 percent, at a new high of 237.75 euros a tonne.
* Paris November had earlier on Wednesday risen to a previous contract high of 237.50 euros as the market reacted to a strong Tuesday close in Chicago markets. Contract highs had also been reached in Paris trade on Tuesday.
* Relentless heat in the key U.S. corn and soybean-growing areas drove benchmark Chicago corn futures to their biggest eight-day rise in three and a half years on Tuesday as drought and a heatwave in the U.S. brought worries about world grain supplies. U.S. grain markets are closed for a holiday on Wednesday.
* Hot weather hitting U.S. corn crops was reducing hopes for a recovery in low corn stocks in the United States, so bringing prospects for tighter world grain supplies.
* "The replenishment of corn stocks is no longer the order of the day," French grains consultancy Offre & Demande Agricole said in a note. "The question now is, what will be the extent of rationing in corn?
* "This factor will thus continue to provide strong support to prices."
* The surge in U.S. prices, coupled with declining crop prospects in the Black Sea region, had left French wheat well placed to win export sales in the early part of the 2012/13 season that began on July 1, traders said.
* Jordan's state buyer called off a tender for 100,000 tonnes of wheat on Wednesday partly because of a surge in Russian export prices as concern intensifies about the size of the Russian crop, traders said.
* Russian wheat also surprisingly failed to win a tender for 50,000 tonnes of wheat from Libya.
* "We could suddenly be seeing a radical change in the export outlook, with the Black Sea region not grabbing all the business as people had expected," one trader said.
* But further rain in France could be a headache for the country's exports by delaying the harvest and reducing the quality of the crop, while fuelling prices by prompting quality premiums to be quoted on the French cash market.
* Traders said France was already looking at brisk export activity this summer at La Pallice on the west coast, where harvesting takes place earlier than in the north of the country.
* A series of cargoes was expected to load barley for Saudi Arabia in July and August after a first one scheduled at La Pallice next week, while French wheat is tipped for a purchase by Algeria in July to August.
* "The loading berths are becoming harder and harder to get hold of," a French trader said.
* Rapeseed futures in Paris also saw some contract highs on the back of Tuesday's jump in Chicago new-crop soybeans.
* Paris August rapeseed closed up 2.75 euros or 0.55 percent at a contract high of 500.50 euros a tonne.
* In Germany, prices were little changed because of a lack of impulse from Paris as dealers awaited U.S. markets to reopen on Thursday.
* Standard milling wheat for September delivery in Hamburg was offered for sale unchanged at 239 euros a tonne, with buyers at around 237 euros.
* Feed wheat for nearby delivery in the South Oldenburg animal feed grains market near the Netherlands was again quoted over milling wheat, unchanged at 242 euros a tonne for nearby delivery with buyers at around 240 euros.
* "The markets are naturally hesitant today with the U.S. closed and failing to provide a price lead," one German trader said. "The fears of weather damage to the U.S. grains belt have been the main driver pushing EU prices up this week."
* "A strong supportive element has also been the continued bad news about harvests in the Black Sea region, especially Russia and Ukraine."
* "Lower-than-expected harvests in Russia and Ukraine coupled with the weaker euro seen in recent weeks could mean much stronger export demand for EU and German wheat than people had anticipated only a couple of weeks ago."
* German barley harvesting started in isolated regions of the south west last week and work is likely to expand in coming days, traders said.
* Following the very dry spring, German wheat has greatly benefited from repeated rain in the last month but dryer, sunnier weather is now needed.
* "I think the final round of harvest forecasts in Germany will be showing an upward trend," another trader said. "The recent wet weather is welcome but more dryness is needed. The way the forecasts are now, a normal or later wheat harvest start in the first couple of weeks in August is likely, not an early harvest start."
* High feed wheat prices continue a pattern seen in recent months as demand from feed makers meets tight old crop supplies. The high feed wheat prices continued to support milling wheat markets, traders said.
* "Feed makers continue to pay very high prices as some have apparently miscalculated," a dealer said. "Old crop wheat supplies are also now increasingly tight." (Reporting by Michael Hogan Valerie Parent and Gus Trompiz; Editing by Alison Birrane and David Hulmes)
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