"The recent rains were really welcome," Andree Defois, chief analyst at France's Strategie Grains, told Reuters.

The analyst has trimmed its estimate of European Union 2007 grain output by five million tonnes from last month to 279.6 million as warm, dry weather in April reduced yield potential.

The soft wheat output estimate was cut by nearly three million tonnes from last month to 124.5 million, but the crop would still be 7 percent above last year's, it said.

But it is the key Black Sea region that has captured traders' attention more recently.

Record high temperatures and drought across Ukraine could reduce the 2007 grain harvest significantly, analysts said. "Drought has practically spread across two-thirds of Ukrainian territory - regions which are main grain and oilseeds producers. Drought may not be unusual for regions like Kherson, but this year it is being observed in Kiev, Kirovohrad, Cherkasy and other regions," UkrAgroConsult consultancy said.

"Spring crop conditions do not promise a significant crop as well. Moisture shortages will be accompanied by dry winds, it will make crop conditions even worse."

And in Russia, the farm ministry said this week the weather in the last days of May was expected to be warm with some precipitation in most parts of European Russia and in the Urals.

This would permit the spring sowing campaign, delayed due to cold weather and rain, to make good progress.

The national weather centre said soil moisture until the end of the month would be sufficient in most of European Russia.

But in the east of the Southern Federal District, one of the country's main bread baskets, soil water content would be low.

IRREVERSIBLE DAMAGE

In France, the south had enough sufficient rain to hold out till harvest time but central and northern regions remained dry.

"In those regions there has been serious damage to the crops. We can forget the very good yields expected a few months ago. Some of the damage is irreversible," said Strategie Grains analyst Laureen Simon.

In Germany, rain in May raised expectations the country would achieve an average wheat harvest following April's drought, which generated fears of very serious crop losses.

"The picture is still unclear but from today's standpoint we do not face a disaster," one analyst said.

Possible damage varies greatly regionally and recent wheat harvest forecasts range from 20.8 million to 22 million tonnes against 22.4 million tonnes last summer.

One at the bottom end, German grain trading house Toepfer has forecast a crop of 20.83 million tonnes.

"Substantial rainfall in the second week of May has significantly improved the water supply of winter and spring plantings," Toepfer said in a report. "But the rain did not come early enough, and we currently expect slightly under-average yields in winter grains and rapeseed."

In Italy, where the government declared a drought emergency earlier this month, rains have reduced crop fears. Some scattered rains were expected this week, but temperatures remain above average in northern and central parts.

Grain traders said new crops in Italy were expected in line with last year's quantity, but there were doubts over quality.

Most of Spain has had regular rain and mild weather so far this spring, which farmers say is ideal for wheat and barley.

The first wheat is likely to be cut near Seville, in the southern region of Andalusia, early next week, Ramon Garcia of the Andalusia branch of farmers' union COAG said this week.