PARIS: Euronext wheat futures closed sharply higher on Thursday after setting fresh contract highs as bigger than expected supply reductions in a US government crop report further fuelled concern over harvest setbacks in major exporting zones. Benchmark December wheat on Paris-based Euronext settled up 9.00 euros, or 3.8%, at 248.75 euros ($291.96) a tonne.

Towards the close it set the latest life-of-contract peak at 249.75 euros, also the highest price for a second-month position since January 2013, although it remained shy of the key 250 euro chart threshold.

Euronext extended gains after the US Department of Agriculture's (USDA) monthly world crop outlook released at 1600 GMT showed an unexpected steep cut to world wheat supply and larger than anticipated reductions in US corn and soy yields.

The USDA's report, which included a massive cut to expected production in top wheat exporter Russia, added to a run of reduced harvest forecasts by analysts.

"Prices are adjusting to the reduced prospects for supply," a futures dealer said.

The run-up to Monday's expiry of options on Euronext September wheat was also fuelling volatility, according to traders. September futures settled up 9.25 euros at 245.75 euros after breaking resistance at 240 euros.

In Poland, prices rose in the past week as the wheat harvest was interrupted by rain, reducing sale offers from farmers.

Exporter purchase prices rose about 40 zloty on the week to around 1,040 zloty (226.8 euros) a tonne for 12.5% protein wheat for August/September delivery to ports.