PARIS, Dec 10 (Reuters) - Western European wheat prices were flat to lower in cautious trading on Monday as the market looked ahead to closely followed U.S. government grain forecasts and shrugged off the latest bullish export news.
* Chicago grain futures fell slightly as a higher dollar and expectations of a partial recovery in the corn supply after this year's drought-depleted harvest led to caution before Tuesday's U.S. Department of Agriculture (USDA) monthly grain estimates.
* On the Paris futures market, January milling wheat slipped by 0.75 euros or 0.28 percent to 268.00 euros ($350) a tonne by 1303 GMT.
* The subdued tone prevailed despite earlier weakness in the euro, linked to concerns over the planned resignation of Italian Prime Minister Mario Monti and news supportive to exports since the weekend.
* "Decent demand over the weekend, a drop in the euro, a possible cut in Argentina exports, a loss of area in the U.S. - all this is being put to one side in a very slow market that is awaiting the USDA report," a futures dealer said.
* Import purchases by Iraq and Saudi Arabia showed healthy demand, and coupled with ongoing harvest problems in Argentina, offered the prospect of demand for exporting zones including North America and the European Union.
* Argentina will allow only 4.5 million tonnes of wheat exports this campaign, against 6 million previously planned, in response to a rain-plagued harvest, a local newspaper reported.
* Another weather concern was the poor state of U.S. winter wheat crops, which recorded their worst-ever ratings during November and could leave fields vulnerable to winter conditions.
* Paris futures had risen on Friday, buoyed by a falling euro and the highest weekly volume of EU export licences in more than two years.
* "The very good export figures (...) continue to give the impression that the potential downside in prices is very limited," grains consultancy Agritel said in a note.
* "With its current pace, the EU may find it will have to drop out of the export market at the end of March."
* The good export outlook and a firm feed wheat market underpinned prices in Germany, which continued to hold high premiums over those in Paris.
* Standard milling wheat for January delivery in Hamburg was offered for sale unchanged at 281 euros a tonne, with buyers at around 280 euros.
* "The good export outlook means that sellers are unwilling to drop prices in line with Paris and are demanding a premium of 13 euros over Paris against 12 euros last week," one trader said.
* "We seem to be in the main window of opportunity for west EU wheat exports, with competition from Russia and Ukraine fading and smaller Black Sea origins like Romania selling out."
* "There is belief that a large proportion of the Saudi wheat purchase over the weekend could be placed in Germany as Saudi Arabia is a traditional German wheat customer."
* Another trader said: "The weaker trend in the euro is a supportive factor today along with snow and freezing temperatures which could disrupt some inland waterways shipping and rural trucking.
* "People are not worried about winter damage to grain plants."
* Continued demand and tight supplies kept German feed wheat around the same level or even above milling prices. Feed wheat for January delivery in the South Oldenburg market near the Netherlands was offered for sale unchanged at 282 euros a tonne with buyers around 280 euros. ($1 = 0.7735 euros) (Reporting by Valerie Parent and Gus Trompiz in Paris and Michael Hogan in Hamburg; editing by Jane Baird)