EU wheat edges higher with eyes on Ukraine war developments

PARIS/HAMBURG, Dec 30 (Reuters) - European wheat edged higher on Tuesday as traders assessed the latest developments in the war between Russia and Ukraine and the impact of a Russian drone attack on wheat cargoes in Black Sea ports in Ukraine's Odesa region.

March milling wheat BL2H6, the most active contract on the Paris-based Euronext exchange, was up 0.1% at 191.00 a metric ton by 1612 GMT.

The contract had hit a nearly three-week high in the previous session as hopes of an end to the war in Ukraine faded after the Kremlin said Ukraine had targeted Russian President Vladimir Putin's residence, an accusation Kyiv strongly denied.

On Tuesday, two Panama-flagged civilian vessels - Emmakris III and Captain Karam - were attacked by Russian drones as they entered a Ukrainian Black Sea port to load wheat, the Ukrainian navy said.

The attacked Black Sea ports continued to operate, Ukrainian Deputy Prime Minister Oleksiy Kuleba said.

"Reports about the prospects for peace in Ukraine swing from positive to negative every day, and the market cannot make a real assessment of whether peace is really in sight," one German trader said.

"I think people need to see evidence of sustained attacks on shipping before reacting," he added.

Traders also noted the bearish factors of a big wheat harvest arriving in rival exporter Argentina and falling export prices for Russian wheat.

There was talk that Egypt's state importer Mostakbal Misr (Future of Egypt) is inquiring about a large wheat purchase for February/March shipment, another trader said, adding that recent price falls would put Russian wheat in a good position.

Agricultural consultancy Sovecon, meanwhile, raised its 2025/26 Russian wheat exports forecast by 0.4 million metric tons to 44.6 million tons on Tuesday.

"Importer demand remains elevated. Buyers that had delayed purchases in hopes of lower prices have returned to the market, pushing shipments to historically high levels for this period," the analyst said in a note.

There was no publication of European grain export and import data on Tuesday due to the year-end holiday break. The next release will be on January 6, the European Commission said.