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Wheat rises on strong demand, adverse weather

By Gus Trompiz and Naveen Thukral

PARIS/SINGAPORE, Nov 18 (Reuters) - Chicago and European wheat futures rose on Friday as strong international demand and adverse weather in the southern hemisphere encouraged investors to look past a widely expected extension of a corridor for grain exports from Ukraine. Corn and soybeans also firmed as strong weekly U.S. exports and weather concerns in Argentina countered worries about Chinese demand over rising COVID-19 cases.

The most-active wheat contract on the Chicago Board of Trade (CBOT) was up 0.7% at $8.12-3/4 bushel by 1306 GMT, while December wheat on Euronext added 1.7% to 330.00 euros ($342.01) a tonne. Both markets recovered from 2-1/2-month lows hit on Thursday after a deal allowing war-torn Ukraine to export agricultural products from Black Sea ports was extended for another 120 days.

"As expected, the Black Sea deal has been extended, which is going to add pressure on prices but we have dryness in the U.S. Plains and Argentina," said one Singapore-based grains trader. "Supplies are set to remain tight in the coming months."

Argentina's 2022/2023 wheat production is estimated at 13.4 million tonnes, down 39.4%, the economy ministry said on Thursday, in a latest assessment of the crop hit by drought and frosts. Torrential rain in eastern Australia has also raised doubts about wheat quality in what is expected to be a big harvest. Euronext had already closed higher on Thursday as talk of further sales of French wheat to China and of possible sales of northern European wheat to the United States boosted export sentiment. Analysts and traders also saw ongoing threats to Black Sea supply, with the agreement to maintain the corridor leaving some issues unresolved as Russia's invasion of Ukraine rages on.

"Upward risks to wheat prices are likely to predominate in view of the ongoing conflict between Ukraine and Russia," Commerzbank said in a note.

CBOT corn rose 0.5% to $6.70-1/2 a bushel and soybeans gained 0.6% to $14.24-3/4 a bushel. Argentina farmers could reduce the area they plant with soy unless drought eases, the Buenos Aires grains exchange said. Traders are watching to see if rains forecast in the coming days bring relief to Argentine crop belts.

Prices at 1306 GMT Last Change Pct End Ytd Pct Move 2021 Move CBOT wheat 812.75 6.00 0.74 770.75 5.45 CBOT corn 670.50 3.00 0.45 593.25 13.02 CBOT soy 1424.75 7.75 0.55 1339.25 6.38 Paris wheat 330.00 5.50 1.69 276.75 19.24 Paris maize 309.25 3.75 1.23 226.00 36.84 Paris rape 609.75 10.25 1.71 754.00 -19.13 WTI crude oil 80.54 -1.10 -1.35 75.21 7.09 Euro/dlr 1.04 0.00 0.04 1.1368 -8.83 Most active contracts - Wheat, corn and soy US cents/bushel, Paris futures in euros per tonne ($1 = 0.9649 euros) (Reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Sherry Jacob-Phillips and Vinay Dwivedi)

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