EU wheat gains further as crude oil rises on war escalation

PARIS, March 12 (Reuters) - European wheat futures rose for a second day on Thursday, supported by crude oil prices as headlines from the Middle East war suggested no immediate de-escalation, traders said.

May milling wheat BL2K6 on Euronext was up 1.3% at 208.75 euros ($240.67) a metric ton by 1723 GMT.

The benchmark contract earlier rose to 210.75 euros, approaching a seven-month high of 212.50 euros hit on Monday.

Oil prices LCOc1 jumped to around $100 a barrel after attacks on oil tankers in the Gulf and as Iran warned it would continue to block the Strait of Hormuz. O/R

"Wheat markets are likely to remain highly volatile in the near term as traders balance geopolitical risk, energy price movements and macroeconomic pressures against comfortable global supply," British merchant ADM Agriculture said in a note.

A fall in the euro EUR= against the dollar also lent some support to Euronext, though export prospects remained mixed given stiff competition and uncertainty over the Middle East war's impact on demand.

Consultancy Expana lowered its forecast for European Union soft wheat exports in 2025/26 for a fifth consecutive month, after reducing projected wheat and barley shipments to the Middle East due to the war in the region.

In France, loading at the country's main grain export hub Rouen was disrupted by a week-old strike at a tugboat company, the port's operator said.

In Germany, this year's total wheat crop is expected to fall 3.8% on the year to 22.28 million metric tons, the country's association of farm cooperatives said in its first detailed 2026 harvest estimate.

Yields were expected to fall from last year's very high levels but still be around average, it said.

"Germany's wheat seems to have escaped serious damage from the very deep frosts in February with the latest wheat types showing remarkable toughness and ability to resist frosts," one German trader said.

"The worry now is where a good German wheat harvest can be exported to if the Black Sea region has good crop, again generating low Black Sea prices," the trader added.

($1 = 0.8674 euros)