EU wheat jumps 3% as drought in Russia sparks buying

PARIS, June 18 (Reuters) - European wheat prices rose on Wednesday, buoyed by a rally in U.S. markets, dry weather in Russian wheat-growing regions and an increase in French wheat export projections due to strong late-season sales.

Benchmark September milling wheat BL2U5 on Paris-based Euronext, closed 3% higher at 208 euros ($239.41) a metric ton.

At the same time, the most traded wheat contract Wv1 on the Chicago Board of Trade was up 4.3% at $5.72-3/4 a bushel.

Krasnodar, one of Russia's largest wheat-producing regions, has declared a drought emergency, echoing Rostov, another major wheat grower, which declared one last week.

"It's not clear whether this will have any impact on the size of the wheat crop, but it prompted protective buying," a French trader said.

He also referred to farm office FranceAgriMer's higher forecasts for 2024/25 French soft wheat exports on Wednesday due to brisk late-season demand.

"Better late than never," the trader said.

Meanwhile Black Sea wheat appeared almost certain to supply the purchase of over 500,000 tons in Algeria’s tender on Tuesday, with Ukraine, Romania and Bulgaria seen as likely sources, a German trader said.

"The West EU is not expected to be supplied. Perhaps not much of the Algerian purchase will come from Russia, but Russian prices are weak as Russia’s crop outlook remains positive.”

Russian July 11.5% protein wheat was priced on Wednesday around $214-$221 a ton FOB, about $8-$10 a ton cheaper than French wheat depending on Euronext and currency moves, traders said.

Germany's wheat crop will increase 16.3% on the year to 21.51 million tons, the country's association of farm cooperatives said in its latest harvest estimate on Wednesday, with crops benefiting from welcome rain after a dry spring.

The association’s forecast increased by about 500,000 tons from May.

"The trouble is that with a Black Sea domination of export markets shaping up for the new season, it is hard to see where German wheat could be exported to," a German trader said.