PARIS, Nov 5 (Reuters) - Euronext wheat edged up on Wednesday to a two-month high as further weakness in the euro and continuing talk of Chinese demand for U.S. wheat supported the European market.
Short-term competition from Argentine wheat in Morocco and Black Sea supplies in Egypt limited gains in front-month futures on Euronext, however.
December wheat BL2Z5, the most active contract on Euronext's Paris-based futures, was 0.1% up at 195.00 euros ($227.41) a metric ton by 1644 GMT.
The front-month position earlier reached 195.50 euros, its highest since August 27 and above a previous two-month peak from Tuesday.
Second-month March futures were up 0.8% at the psychological 200 euro mark, as they also held around a two-month top.
"Matif (Euronext) is very sensitive to the euro-dollar rate at the moment and is also drawing strength from other wheat markets," a futures dealer said.
The euro EUR= ticked lower to a latest three-month low against the dollar, helping keep western French wheat in contention for more sales to the crucial Moroccan market. FRX/
Chicago wheat Wv1 hovered around a four-month high as traders assessed recurring rumours of Chinese purchases of U.S. crop. GRA/
"There is so much talk about China purchasing from the U.S. that the market is starting to accept it as a fact, although estimates of tons involved vary widely,” a German trader said.
Market talk referred to Chinese purchases of U.S. soft red winter and soft white wheat for December–February shipment ranging from 240,000 to 400,000 tons, with some estimates even higher.
However, cheaper prices for Argentine and Black Sea origins were keeping traders cautious about Chinese demand for U.S. wheat and prospects for western European wheat in North Africa.
New-crop Argentine 11.5% protein wheat was still the world’s cheapest at $209-$211 a ton free on board (FOB) for December shipment.
Russian 11.5% protein wheat was around $227-$229 a ton FOB for November/December shipment, while French, Ukrainian and Romanian wheat were all offered at about $2-$3 over Russian, according to traders.
Accelerating Russian shipments and news of a bigger proposed export quota for Russian grain in the second half of the season were also tempering export sentiment in Europe.
Financial investors reduced their net short position in Euronext wheat last week, data showed on Wednesday.
($1 = 0.8575 euros)
(Reporting by Gus Trompiz in Paris and Michael Hogan in Hamburg; Editing by Tasim Zahid)
((gus.trompiz@thomsonreuters.com))