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EU wheat slips to one-week low on strong euro, good crop weather

PARIS, March 31 (Reuters) - Euronext wheat futures extended losses on Thursday, hitting their lowest in more than a week as a rallying euro dampened export sentiment and rain relief expected in dry U.S. wheat belts kept attention on a plentiful s...

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Wheat and money. iStockphoto.com

PARIS, March 31 (Reuters) - Euronext wheat futures extended losses on Thursday, hitting their lowest in more than a week as a rallying euro dampened export sentiment and rain relief expected in dry U.S. wheat belts kept attention on a plentiful supply outlook.

Traders were also awaiting U.S. Department of Agriculture (USDA) planting and stocks reports at 1600 GMT that are among the most watched publications of the year in grain markets.

May milling wheat, the most active contract on Euronext's Paris-based futures market, was down 2.00 euros, or 1.3 percent, at 153.25 euros a tonne by 1504 GMT.

It earlier reached its lowest since March 21 at 152.75 euros.

Chicago wheat also extended its fall as weather forecasts called for some rain next week for dry parts of the southern U.S. Plains hard red winter wheat zone.

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"Conditions for wheat are decent pretty much everywhere, whether in Europe, the Black Sea and the United States," one futures dealer said. "You can't say we have a real problem yet."

The European market was also dented by a rally in the euro, which hit a 5-1/2 month high against the dollar. The euro's strength tempered export hopes after signs of brisk demand for European Union wheat this month.

Official EU data showed the bloc awarded another big volume of soft wheat export licences this week, with 969,000 tonnes cleared following just over 1 million tonnes last week.

However, the total so far this season remained 13 percent below the year-ago level and traders say a favourable euro is important to help squeeze out more export sales to avoid high carryover stocks.

In Germany, cash premiums in Hamburg were raised to compensate for the heavy overnight fall in Paris, but only partly.

Standard wheat with 12 percent protein content for April delivery was offered for sale at 2 euros over the Paris May contract against 1 euro over on Wednesday. Buyers were seeking 0.5 euros over Paris.

"Buyers were not willing to give full compensation for the big overnight fall in Paris in view of the large wheat inventories still seeking buyers, with around 25 percent of the old crop in parts of north Germany still unsold," one trader said.

"I think quite a few buyers were expecting the USDA report today to be bearish for prices, with a focus on large global wheat stocks in coming days."

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