Euronext wheat rallies as euro falls, Algeria buys

PARIS, July 15 (Reuters) - Euronext wheat rose on Tuesday, led by gains in front-month futures as a drop in the euro and news of an import purchase by Algeria encouraged short-covering after recent contract lows.

September wheat BL2U5 on Euronext was up 1.9% at 201.00 euros ($233.52) a metric ton by 1605 GMT, moving back above the psychological 200 euros threshold and away from a contract low of 192.75 euros in early July.

December wheat BL2Z5 added 1.0% to 209.75 euros.

The euro EUR= fell against the dollar after a higher U.S. inflation reading for June, making European grain cheaper overseas. FRX/

News that Algeria had purchased wheat at around $257 a ton, cost and freight, in its tender on Tuesday also boosted demand sentiment, even if the volume was unclear and French wheat was still thought to be tacitly excluded due to diplomatic tensions between Paris and Algiers, traders said.

"There are so many short positions in the market that it doesn't take much for Matif (Euronext) to rally," a French trader said.

Financial investors hold a large net short position in Euronext wheat, while the September contract has by far the highest level of open positions.

The recovery in Euronext prices from contract lows has also been supported by export snags in Russia.

“The big question now is when Russian new crop export flows will begin to appear in the market in larger volumes,” one German trader said.

Russian and Ukrainian 11.5% protein wheat for August shipment were priced closely together at $225-$228 a ton free-on-board, still around $7 cheaper than French supplies, depending on Euronext and exchange rate moves.

Romanian wheat was around $228-$230, but U.S. soft red winter wheat was regarded as cheaper than Black Sea supplies at around $218-$221 a ton FOB Gulf.

Consultancy IKAR trimmed its 2025 Russian wheat production forecast to 84.0 million metric tons from 84.5 million tons.

European Union soft wheat exports over July 1-13 totalled nearly 246,000 tons, down 78% year-on-year, the European Commission said in its first data for 2025/26.

In France, the farm ministry forecast this year's soft wheat harvest at 32.6 million tons, up 27% from last year's rain-hit crop.

However, traders said a 100,000-hectare downward revision to the ministry's estimate of the soft wheat area was a surprise and may limit the effect of strong harvest yields.

($1 = 0.8607 euros)