EU wheat rallies with crude oil as Mideast war rattles investors

PARIS, March 6 (Reuters) - Euronext wheat futures climbed to their highest since August on Friday, supported by another surge in oil prices as investors fretted over disruption from the Middle East conflict, traders said.

May milling wheat BL2K6 on Euronext was up 2.7% at 207.50 euros ($240.66) per metric ton by 1711 GMT.

The contract earlier reached its highest since August 15 at 208.7 euros, surpassing a previous six-month peak from Tuesday.

Grain markets were again spurred by rising oil prices, with Brent crude LCOc1 reaching $90 a barrel for the first time since April 2024.

Comments by Qatar's energy minister, who said if the war continues he expects all Gulf energy producers to shut down exports within weeks and oil prices to reach $150, further unsettled investors.

Wheat can be sensitive to crude oil, partly due to commodity positions taken by investment funds and also because other grains like corn are widely used for making biofuel.

"You've got flows from commodity funds and you also have the indirect link with corn," a futures dealer said of wheat's rise.

The run-up to the weekend was also encouraging short-covering by participants, like last Friday when expectations grew of a U.S.-Iran war, traders said.

On the physical market, traders said wheat buyers appeared mostly calm against a backdrop of ample global availability.

"In its wheat tender today, Tunisia even bought 25,000 tons less than the volume it sought offers for," one trader said.

There was nonetheless some more demand from Egypt, which traders regarded as war-related short-covering.

An Egyptian buyer was seeking about 30,000 tons of Black Sea 11.5% protein wheat at around $253 a ton cost and freight included (c&f) for April shipment, another trader said.

Grain importers in Arab Gulf countries faced logistical snags from the closure of the Strait of Hormuz. Some were seeking alternative ports to unload, including on the UAE's east coast and in Oman, while Saudi Gulf wheat shipments were being transferred to Red Sea ports, traders said.

“Some blocked shipments waiting outside the Hormuz strait are being offered for resale. This generally involves corn for Iran although some wheat is also seeking new buyers,” the second trader said.

($1 = 0.8622 euros)