MILAN: European wheat futures rose on Friday, recouping losses from the previous day due to support from a rally in soybeans and as operators awaited direction from US Department of Agriculture (USDA) crop estimates due at 1330 GMT.
A fall in the euro also gave some support to Paris prices, making European wheat exports cheaper on the world market.
Benchmark May milling wheat was 3.25 euros or 1.72 percent higher at 207.25 euros ($280) a tonne by 1235 GMT.
US wheat also bounced, helped by a new five-month high for US soybeans on the back of brisk exports to China.
"The markets were still lacking panache today. The imminent publication of the USDA's monthly report seems to have prompted a certain wait-and-see attitude both on Euronext and in Chicago. American soy exports, however, made all the difference," French consultancy Offre & Demande Agricole said in a note.
A Reuters poll of analysts expect the USDA's March supply/demand and crop production reports to show declines in US and global grain and soy ending stocks and declining production of corn and soy in South America.
But some said the report may have little market impact.
"Today's USDA report may end up being something of a damp squib, with the USDA likely to play it safe on the South American soybean production number, preferring to wait until next month when a greater portion of the crop is harvested and yields better understood," FCStone Europe said in a note.
GERMANY
German wheat was little changed in cautious, risk-off business ahead of the USDA forecasts, with firm German feed wheat prices once more providing background support.
Standard quality milling wheat for March delivery in Hamburg was offered for sale unchanged at 215 euros a tonne, with buyers at 213.5 euros.
"High feed wheat prices are supporting the market, while generally there was a risk-aversion attitude as people awaited to see the full impact of the USDA reports," one trader said.
Demand from animal feed producers kept German feed wheat prices around levels for milling wheat in parts of the country, repeating a pattern seen in recent weeks.
Feed wheat for nearby delivery in the South Oldenburg market near the Netherlands was offered for sale at 215 euros a tonne, with buyers at around 213 euros.
Unexpectedly low feed grain exports in past weeks from the Black Sea region have transferred buying interest back to EU feed wheat, with Spanish purchasers recently buying German feed wheat.
"The high feed prices means milling wheat is being sold for feed," another trader said. "Demand from flour mills remains depressed because of poor profit margins, but the high feed grain prices means milling wheat sellers are not willing to cut prices."
Germany's 2012 wheat crop will rise 6.3 percent on the year to 24.2 million tonnes from 22.7 million tonnes in 2011, the German Farm Cooperatives Association said on Thursday in its first harvest forecast.
"This estimate seems to confirm belief that German grain plants did not suffer widespread damage during the cold snap in late January and early February," the second trader said. "Overall the harvest outlook in 2012 remains good."
This belief helped keep German new crop prices well below old crop. New crop milling wheat for September delivery in Hamburg was offered for sale at 197.50 euros a tonne, with buyers around 196.50 euros.
ITALY
Wheat prices in Italy, a major grain importer in Europe, were flat on the week in a balance between sluggish demand and thinning supplies of local wheat and lower imports from Ukraine due to transport problems caused by cold weather, traders said.
Bread wheat was stable at about 220 to 223 euros a tonne for prompt delivery without delivery charges, in line with prices set at a key weekly session of Bologna's grain bourse on Thursday, they said.
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