EU wheat edges higher as traders await key USDA report

PARIS, Nov 12 (Reuters) - European wheat edged higher on Wednesday in volatile trade as operators positioned themselves ahead of a much-awaited U.S. government supply and demand report on Friday.

Benchmark December milling wheat BL2Z5 on Paris-based Euronext closed 0.4% higher at 190.00 euros ($221.58) a metric ton.

By the same time, the most-traded wheat contract Wv1 on the Chicago Board of Trade was down 0.5% at $5.51-1/4 a bushel.

France's farm ministry has cut its forecast for this year's grain maize production to almost 10% less than last year's output after lowering projected yields hit by summer drought in several regions.

Futures were also supported by international demand, although Argentine wheat remained the cheapest on the world market.

Algeria’s state grains agency OAIC is believed to have bought milling wheat in an international tender on Tuesday, which sought limited shipment to two ports only, European traders said on Wednesday.

The volume was initially unclear but initial estimates were that about 150,000 to 170,000 metric tons were bought.

"After the recent Euronext price falls, the west EU is starting to look more competitive against the Black Sea in export markets," the trader said.

"New crop Argentine wheat is by far the cheapest. But it is good to see some new demand appearing with a new tender for wheat from Tunisia and another issued by Jordan.” GRA/TEND

New crop Argentine 11.5% wheat was still seen as the world’s cheapest high-volume origin at $209-211 a ton FOB for December shipment, creating strong competition for EU wheat in important customers including North African ones.

French and Romanian 11.5% protein wheat were quoted about the same at $225-227 a ton FOB for November/December shipment, traders said. Russian and Ukrainian were about $2-3 a ton higher.