PARIS- Euronext wheat fell sharply on Tuesday, moving away from last week's contract highs as the expiry of options on front-month futures fuelled selling.
Traders were awaiting the outcome of an import tender being held by Algeria for an indication of the impact of a rain-hit French harvest on export markets.
Benchmark December wheat on the Paris-based Euronext was down 6.75 euros, or 2.7%, at 244.75 euros ($287.34) a tonne by 1301 GMT, adding to a smaller loss on Monday.
It was retreating from a life of contract peak of 257.75 euros on Friday, which also marked a highest second-month price since December 2012.
Wheat markets surged last week as sharp reductions by the U.S. Department of Agriculture (USDA) to its world wheat supply forecasts added to concern about harvest setbacks in northern hemisphere exporting countries.
Monday's expiry of options on Euronext's front-month September wheat BL2U1 was encouraging profit-taking on Euronext after last week's rally, traders said.
"It's above all a technical move," a futures dealer said of the price fall. "There are also people whose forecasts are not as pessimistic as the USDA's."
Farm office FranceAgriMer on Monday said the French soft wheat crop was showing uneven quality results due to the summer rain, without giving estimates.
In Germany, the association of farm cooperatives on Tuesday reduced its estimates of the country's 2021 wheat crop but said overall wheat quality was reasonable to good, despite repeated rain in August.
"I think the latest estimate confirmed market belief that bad weather means Germany's crop will not reach previous expectations but that quality is basically all right," one German trader said.
Rain again fell on Tuesday in the final northern wheat regions being harvested.
"Germany has a lot of wheat which will reach quality specifications demanded by Algeria and other big importers looking for alternatives to French wheat. But we could have had even more, as this week's rain may reduce the final stage of Germany's harvest to feed wheat standard," the trader said.
Standard 12% protein wheat for September delivery in Hamburg was offered for sale little changed at around 4 euros over Paris December BL2Z1 . Buyers were seeking around 3 euros over Paris.
($1 = 0.8518 euros)
(Reporting by Gus Trompiz in Paris and Michael Hogan in Hamburg; editing by David Evans) ((firstname.lastname@example.org; +33 1 49 49 52 18; Reuters Messaging: email@example.com))