EU wheat rises after Chicago boost, strong demand supports

PARIS, May 15 (Reuters) - European wheat prices edged higher on Thursday, supported by a rise in U.S. markets, dry weather in northern Europe and strong international demand, although Saudi Arabia's tender and Algeria's large purchase were seen benefiting Black Sea origins.

Benchmark September milling wheat BL2U5 on Paris-based Euronext, closed 0.2% higher to 205.50 euros ($229.75) a metric ton.

The most traded wheat contract on the Chicago Board of Trade Wv1 was up 0.8% by the same time.

Operators continued to closely monitor dry weather in Northern Europe, notably in northern France and Germany, with little to no rain expected in the region in the coming week.

If dry weather persists through June, EU wheat and barley output could fall several million tons below current forecasts, Strategie Grains said, although it did not expect this scenario.

In a monthly report the consultancy raised by 1.7 million tons its forecast of EU soft wheat output this year, to 129.8 million metric tons, now 14.7% above last year's rain-hit harvest.

It also raised its barley harvest estimate by 1.2 million tons from last month to 52.4 million tons, now 5.4% above 2024.

On the tender front, traders said it appeared that Algeria’s wheat purchase on Wednesday would be dominated by Black Sea suppliers especially Romania, Bulgaria and possibly Russia.

"Based on prices French wheat should have won a big slice of the business but it appeared to have been excluded for political reasons," a German trader said.

A major purchase tender for 655,000 tons issued by Saudi Arabia on Thursday was seen as welcome new demand, but the Black Sea was again tipped to win. Sellers have the freedom to select the origin they will supply in Saudi tenders.

"You would have to expect wheat from Russia, the United States and Romania to win the Saudi tender rather than the west EU," another trader said.