HAMBURG: European wheat futures in Paris drifted down on Friday as markets assessed the impact of renewed conflict between the United States and Iran, with export-punishing euro strength also undermining sentiment.

Benchmark September milling wheat on the Paris-based Euronext was down 0.4percent at 205.50 euros (USD241.91) a metric ton at 1426 GMT after earlier hitting 204.75, its lowest since April 20.

Weak export demand in the face of ample EU supplies and relief to crops following rain this week depressed market sentiment. Euro strength, which made west EU wheat more expensive in export markets, added further pressure on prices.

A public holiday in France meant many market participants were absent. “Euronext wheat is rather directionless today,” said Donatas Jankauskas, analyst at CM Navigator. “Crude oil has stabilised as the market waits for Iran’s response to the US peace proposal, and Chicago wheat is also rangebound.”

“With Chicago offering little direction, Paris wheat is mainly reacting to the firmer euro, which is mildly negative for EU export competitiveness.”

Rain this week at leading EU producers France and Germany has calmed immediate fears about crop stress from dryness, creating expectations of large new crop supplies this summer. “It has been raining in Germany all this week and for me the concerns about dryness stress are over apart from some south German areas,” one German trader said. “But earth has few water reserves and a dry June would again bring concern for wheat.”

Export demand remained thin, with importers delaying purchases in the hope any Iran peace deal will push prices down, with large unsold stocks believed to be held in the west EU.

“Fundamentally, wheat markets still look heavy with large supplies, but geopolitics, especially the events in Iran, are keeping a floor under prices,” Jankauskas said.—Reuters