EU wheat higher with crude oil as war worries grow

PARIS, March 11 (Reuters) - European wheat futures rose on Wednesday, tracking a rebound in crude oil as financial markets fretted over the potential impact of the U.S.-Israeli war with Iran.

May milling wheat BL2K6 on Euronext settled 1% up at 206 euros ($238.22) a metric ton. The benchmark contract had reached a seven-month high of 212.50 euros on Monday.

May wheat is now the front-month position BL2c1 on Euronext after March futures expired on Tuesday at 191.75 euros.

Crude oil recouped some of its steep losses from Tuesday, with investors worried about prolonged disruption from the Middle East conflict and the announcement of an oil stocks release by the International Energy Agency seen as largely priced in. O/R

"We're closely correlated with crude," one Euronext dealer said. "But we might not get more speculative buying because the physical market is not following."

Financial investors extended their net long position in Euronext wheat last week, having switched from a net short the previous week, data on Wednesday showed.

Traders continued to assess possible consequences for grain trade from rising fuel and shipping costs.

“Importers are generally waiting in hope the Iran fighting will end quickly rather than buying at current high prices,” a German trader said. “An exception is Egypt, where private buyers are again seeking Black Sea wheat.”

An Egyptian buyer was on Wednesday seeking about 40,000 tons of Black Sea 11.5% protein wheat at about $255 a ton, cost and freight (c&f), for March 15-April 15 shipment, he said.

Algeria was thought to have booked between 150,000 and 200,000 tons of wheat in a tender on Tuesday, paying around $291 a metric ton c&f, according to traders.

While the Algerian tender specified delivery to small ports, which typically brings higher costs, traders still noted a sharp difference compared with a lowest price of $271.69 paid by Tunisia in a tender last Friday.

In France, monthly supply and demand forecasts from FranceAgriMer underscored ample supply. The farm office cut its projection for French soft wheat exports outside the European Union for the fourth month in a row, and increased its outlook for 2025/26 French soft wheat stocks to a 16-year high.

($1 = 0.8648 euros)