HAMBURG: European wheat futures in Paris fell sharply on Monday, following US markets in Chicago lower despite Russia announcing plans for a tax on wheat exports.

March milling wheat on the Paris-based Euronext closed down 4.25 euros, or 2%, at 206.25 euros ($250.70) a tonne. Euronext had hit its highest since Nov. 27 at 211.25 euros on Friday following reports that Russia planned to tax wheat exports.

On Monday, Russia's economy minister Maxim Reshetnikov confirmed Russia plans to impose an export tax on wheat, as part of measures to stabilise rising domestic food prices. Rising food costs were criticised by President Vladimir Putin.

The news could have been positive for EU prices, hindering export sales by rival Russia. But the news of the Russian tax started a major wave of "buy the rumour and sell the fact" selling in both Chicago and Paris markets, with US wheat also down 2.5% in early Monday trade, traders said.

Falling Russian domestic wheat prices also added to weakness in Euronext.

In Germany, traders were expecting a mixed impact from the planned Russian export tax.

"It seems likely that Russian exporters will try to sell and ship out as much wheat as possible before the tax is imposed on Feb. 15," one German trader said.

"This means prospects for new export sales of German wheat in the rest of December and in January are not good. After that we will have to see if Russian domestic prices fall enough to absorb the disadvantage of the export tax."

Standard bread wheat with 12% protein for January delivery in Hamburg was offered for sale at around 5.0 euros over Paris March with buyers seeking around 3 euros over.