PARIS: European wheat futures extended gains on Friday to reach a one-week high as growing tensions in eastern Ukraine raised the threat of disruption to the key Black Sea export region.
Russia warned Kiev on Friday that it would face justice for a "bloody crime" in eastern Ukraine, where Ukrainian forces killed up to five pro-Russian rebels a day earlier.
Dry growing conditions in the United States and parts of Europe were also keeping prices firm, with reports that some of the worst-affected U.S. wheat belts had no rain this week.
November milling wheat, the new-crop benchmark and most traded contract on the Paris-based Euronext market, settled 2 euros, or 1 percent, higher at 207 euros.
Paris May wheat, the last remaining old-crop contract, added 1.25 euros, or 0.6 percent, to 217.25 euros.
"The markets remain supported by the political tension in Ukraine, with tanks constantly shown on the television news and a real risk of fighting, which would surely interrupt Black Sea grain exports," one trader said.
Concern about disruption to Black Sea grain exports had eased in recent weeks as shipments continued normally despite Ukraine and Russia's standoff over Crimea.
"Last month we didn't think there were actually going to be people shooting at each other. This is a new level now," one futures dealer said.
The International Grains Council said on Friday that it had made a downward revision to its 2014/15 global corn and wheat production forecasts, citing concerns over crop conditions, though it emphasised that overall supply prospects are good.
On the Paris rapeseed futures market <0#COM:>, front-month May, the last-remaining old-crop contract, took more heavy losses as operators closed positions before its expiry on April 30.
The May contract, which has been trading at a large premium to new-crop futures, was down 10.75 euros, or 2.6 percent, at 396 euros. New-crop contracts were higher.
On Germany's cash market, wheat premiums were marked down to adjust for the rise in Paris, with thin purchase interest again restraining trade.
Standard milling wheat for May delivery in Hamburg was offered for sale at 2 euros under the Paris May wheat contract against 1 euro over on Thursday. Buyers were offering 4 euros under Paris against 2 euros under on Thursday.
New crop wheat for delivery in Hamburg from September was offered for sale at 3.5 euros over Paris November against 4 euros over on Thursday. Buyers were offering 2 euros over.
"With Paris high again there is more attention on the outright prices being achieved and more willingness to be flexible on premiums," one German trader said. "Old-crop May traded at 212 euros in Hamburg on Wednesday and buyers want that level again today."
Rain in the coming days is expected to help crops in France and Germany after a long dry spell.
Widespread rain is forecast in Germany from Saturday to Tuesday, especially in parched southern regions.
In France, the dry weather continued to allow rapid maize sowing last week, with 68 percent of the planned area sown by April 21, up from 39 percent a week earlier, data from FranceAgriMer showed on Friday.
The condition of soft wheat and barley crops declined on the week, but most crops remained rated good or excellent and forecast rain is expected to boost plants in dry zones.
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