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PARIS: Paris wheat futures set another 5-1/2 month low on Tuesday as strength in the euro exacerbated negative export sentiment in western Europe, traders said.

March wheat, which has become the market benchmark after last week’s expiry of options against December futures, was down 0.4% at 228.75 euros a metric ton by 1507 GMT. It earlier dropped to 228.50 euros for its weakest since May 31.

The euro rose to a three-month high against the dollar, making European grain more expensive overseas, before steadying.

The European market has been pressured in recent weeks by a lull in demand and competition from cheaper supplies of Russian wheat.

The export concerns have offset the risk that rain delays to sowing in France could affect next year’s harvest.

“The euro rally is adding another headache,” one futures dealer said. “The French weather problem is not enough to spark a reaction from the market.” Weekly European Union data showed the bloc’s soft wheat exports so far this season were 19% below the level a year earlier, though there was no data for Bulgaria.

Traders are waiting to see whether the price drop tempts big importers such as China come back into the market after tenders were called this week by Tunisia and Jordan.

“The trouble is that wheat from Russia and elsewhere in the Black Sea (region) is so cheap that it must be expected to win tenders in the near future,” one German trader said.

“Cheap Black Sea supplies are also encouraging importers to buy only hand to mouth.” Export prices for Russian wheat with 12.5% protein content for December delivery were again well below western EU prices at about $230 a ton free on board (FOB), with January little higher at about $233 to $234 a ton.

Standard 12% protein wheat for November delivery in Hamburg was offered for sale at a premium of about 5 euros over the Euronext December contract.

Traders are also waiting to see if the election of radical libertarian Javier Milei as president of Argentina will lead to a relaxing of grain export regulations. “This would also be bearish for world prices if the Argentines start selling more,” the trader said.

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