UPDATE 1-European wheat bounces from 8-month low

Mon Mar 11, 2013 1:20pm EDT

(Updates with afternoon trading)

PARIS, March 11 (Reuters) - European wheat futures rose on Monday, recovering from an eight-month low, as a rally in corn and healthy export prospects encouraged the wheat market to look beyond bearish supply estimates from the U.S. government.

* Benchmark May milling wheat on the Paris futures market was up 3.00 euros or 1.30 percent at 233.25 euros a tonne by 1715 GMT, to pull away from a low of 230.00 euros struck just before Friday's close.

* Paris prices recovered in step with Chicago wheat as U.S. corn futures rose for a third day after the U.S. Department of Agriculture (USDA) surprised the trade by not increasing U.S. corn stocks.

* "We're bullish on corn for the week. This could lead to a rebound on wheat but it all depends on corn's leadership," a futures dealer said.

* With U.S. corn trading at an unusual premium to wheat, an ongoing rally in corn should take wheat higher too and help wheat overcome technical weakness after eight-month lows on both sides of the Atlantic, dealers said.

* Monday's session was also the last day of trading for front-month March, with the contract trading up 5.00 euros at 239.00 euros in small volumes.

* Friday's closely watched USDA report initially weighed on wheat markets by raising U.S. and world wheat supply by more than expected.

* But USDA's decision to leave U.S. corn supply unchanged, plus an export-driven tightening of wheat supply in the European Union, provided support for European wheat.

* The USDA added 1 million tonnes to its forecast for EU all-wheat exports in 2012/13, leading it to cut its EU wheat stocks outlook to below 10 million tonnes.

* "This means we are currently facing the lowest European wheat stocks of the past few decades," French grains consultancy Agritel said in a note.

* Weekly EU wheat export licences again showed strong volumes last week at 607,000 tonnes.

* Customs data showed French soft wheat exports outside the EU in the July-January period were up 1 percent on year at 5.71 million tonnes, overtaking the year-earlier level for the first time this season.

* France could see fresh exports in maize, with cash brokers reporting interest from Asia for food maize after cases of aflatoxin in Serbia and Romania creating concern about sourcing from eastern Europe.

GERMANY

* In Germany, standard milling wheat for March delivery in Hamburg was offered for sale unchanged from late Friday levels at 247 euros a tonne with buyers at around 245 euros.

* It was earlier offered for sale down two euros to reflect Friday's close in Paris before recovering in step with Monday's futures market.

* "People seem to be taking a relaxed view of the USDA report which overall did not challenge people to make major reassessments of the fundamental market outlook," one German trader said.

* Thick snow in north German grain belts was seen as providing wheat plants with good protection against a sudden fall in temperatures over the weekend.

* Continued demand and tight supplies kept feed wheat prices close or above milling wheat in parts of Germany.

* Feed wheat for nearby delivery in the South Oldenburg market near the Netherlands was offered for sale up 1 euro at 254 euros a tonne with buyers at 250 euros.

POLAND

* Polish wheat prices fell in the last week, with slack demand from mills and slow exports weakening.

* Milling wheat prices dropped by 20 zlotys (5 euros) a tonne to below the important 1,000 level, to 960 to 990 zlotys a tonne (231 to 239 euros) delivered to mills in Poland.

* Export wheat prices also fell by 20 zlotys but remained over internal prices at between 1,010 to 1,020 zlotys a tonne (244 to 246 euros) delivered to Baltic port silos.

* "Grain prices in the country are continuing their recent decline," one Polish trader said.

* "The upcoming spring farm fieldwork and necessity to purchase fertilizers has encouraged more farmers to release some grains to the market, this selling is meeting moderate purchases by processors and slowing grain exports."

* Feed wheat prices also dropped by 20 zlotys to between 940 and 970 zlotys a tonne (227 to 234 euros) delivered to feed mill. (Reporting by Gus Trompiz and Valerie Parent in Paris, and Michael Hogan in Hamburg; Editing by William Hardy)

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