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EU wheat follows US futures down, awaits USDA report

HAMBURG, Jan 11 (Reuters) - European wheat prices were pressured by a
fall in U.S. grain futures on Wednesday in cautious trade ahead of a key U.S.
government crop report.	
   * Losses in Europe were limited by the corresponding drop in the euro which
boosts European wheat export prospects.  	
    * Europe's benchmark wheat, the Paris March contract, was down 0.50
euros or 0.25 percent at 201.25 euros a tonne by 1250 GMT as the contract faced
resistance close to last week's 3-1/2-month high of 203.50 euros.	
    * U.S. corn, wheat and soybeans fell on Wednesday, weighed down by a firm
dollar and rains in Argentina which brought much-needed relief to parts of the
South American country's drought-hit crop belt. 	
    * Trade was cautious ahead of crop estimates on Thursday from the U.S.
Department of Agriculture (USDA) which will be closely watched for changes to
the U.S. corn balance and forecasts of production in drought-hit exporter
Argentina. 	
    * But with European prices stalling at resistance levels after a sharp rally
since December, it was unclear whether the market would be fired up by cuts to
the USDA's outlook, traders said.	
    * "We have risen by 30 euros in the past month, we would really need
something big in the USDA reports to rise further," a French futures dealer
said.	
    * A fresh fall for the euro provided background support to Paris prices and
boosted the prospects for French wheat in a wheat purchase tender by Algeria.
 	
    * European dealers are also awaiting the results on Thursday of this year's
first round of bidding for wheat imports under the European Union's tariff quota
system (TQS).  	
    * TQS permits are often used to ship Ukrainian feed wheat to
import-dependent Spain.	
    * Heavy demand is expected to lead to most of the main tranche of 1.2
million tonnes of wheat for the first half of the year to be allocated, traders
said.	
    	
    SPAIN	
    * Spanish physical wheat extended recent gains to line up with influential
futures markets in Paris and Chicago.	
    * The Spanish market was in a lull as traders awaited results due on
Thursday of the EU tender to import wheat under the TQS scheme.	
    * Dealers estimated Spain took about 800,000 tonnes out of a total 1.2
million of permits available to import low and medium-quality wheat from
countries other than the United States and Canada.	
    * Prompt feed wheat was quoted in Spain's leading grains port Tarragona at
218 euros/tonne, up 4-6 euros from Monday.	
    * "They're are more players in the market, but it takes a lot to sell at
these prices. People are waiting for the TRQ results, and of course for the USDA
tomorrow," a Spanish trader said.	
    * Spanish dealers also said trade was slow due to lack of demand after a
fall in herd numbers, and because farmers were holding on to old crop wheat.	
    	
    GERMANY	
    * Germany's market was little changed in restrained trade ahead of the U.S.
Department of Agriculture crop reports on Thursday but with background support
coming from with feed wheat prices buoyed by strong demand. 	
    * Standard bread-quality wheat for January delivery was offered for sale
little changed at around 204-203 euros a tonne with buyers at around 202 euros.	
    * "People are holding back in advance of the USDA report on Thursday and are
taking little risks," one German trader said.	
    * "Firm demand for feed wheat is providing background support. There is also
feed wheat demand from Spanish and Portuguese buyers who are taking short-cover
ahead of the results of the TQS tender."	
    * Short covering by animal feed makers was keeping feed wheat prices at
around milling wheat. Feed wheat for delivery in the South Oldenburg market near
the Netherlands was offered for sale at 203 euros a tonne for nearby deliveries
with buyers around 201 euros.	
 * Prices at 1250 GMT
 
  Product             Last    Change   Pct Move End 2010 Ytd Pct 
 
  Paris wheat         201.25    -0.50    -0.25   252.20   -20.20
 
  Paris maize         204.50    -0.50    -0.24   235.00   -12.98
  Paris rapeseed      456.75     1.00    +0.22   497.25    -8.14
  CBOT wheat          635.25    -4.50    -0.70   794.25   -20.02
  CBOT corn           647.75    -4.25    -0.65   629.00     2.98
  CBOT soybeans      1215.25    -8.50    -0.69  1393.75   -12.81
 
  Crude oil          101.64    -0.60    -0.59    91.38    11.23
  Euro/dlr              1.27277
 *Front month contracts. CBOT contracts in cents per bushel except 
 rice which is in dollars per hundredweight. Paris wheat in euros 
 a tonne 
 	
 (Reporting by Michael Hogan, Valerie Parent and Martin Roberts; Editing by
Anthony Barker)
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