EU wheat falls as stronger euro hurts competitiveness

PARIS, April 10 (Reuters) - European wheat futures fell 1.5% on Thursday, as a rally in the euro hampered its competitiveness on world markets and pressured by weakness in Chicago.

Benchmark May milling wheat BL2K5 on Paris-based Euronext, settled 1.5% lower at 216.50 euros ($242.00) a metric ton.

U.S. President Donald Trump stunned markets on Wednesday by awarding a 90-day reprieve on his reciprocal levies that had gone into effect less than 24 hours earlier, though he maintained a baseline tariff rate of 10% on most countries.

The European Union followed on Thursday with European Commission chief Ursula von der Leyen saying it would pause its first countermeasures against U.S. tariffs for a similar period.

The euro hit its highest level since July 2023 on Thursday as the dollar sank across the board in a volatile market after Wednesday's dramatic tariff announcement.

"There is relief that European grain markets look like escaping disruption in a matter of days from the U.S. tariffs and EU tariff retaliation,” one German trader said.

"But the stronger euro and the overall resilient strength of Euronext this week have hurt EU export competitiveness after several weeks in which France was the cheapest European origin excluding Ukraine," he added.

Russian 11.5% protein wheat was now $243-$246 a ton FOB, about $3 a ton cheaper than French/west EU supplies, depending on Euronext, he said. Romanian wheat was also around $2-$3 cheaper than French.

The U.S. Department of Agriculture's supply and demand report on Thursday brought little surprise in wheat but corn extended gains after the agency cut its U.S. corn inventories estimate more than expected.

Strategie Grains increased its forecasts for EU cereals production in 2025/26, citing improved growing conditions.

After extreme dry weather in March and April, significant and repeated rain is forecast in Germany and France next week.

"The forecast rain would be just in time to prevent fears of dryness stress to grains if it actually arrives," one German trader said.

One impact of dry weather is a surge in shipping costs on Germany’s Rhine river as low water compels vessels to sail less than half full.

($1 = 0.8946 euros)