EU wheat holds firm as war hangs over market

PARIS, March 26 (Reuters) - Euronext wheat edged higher for a third session on Thursday as uncertainty over the course of the U.S.-Israeli war with Iran pushed up oil prices and weakened the euro against the dollar.

May milling wheat BL2K6, Euronext's most-active position, settled 0.6% up at 205.25 euros ($236.61) a metric ton, moving further from Monday's 2-1/2 week low of 199.00 euros.

Crude oil rose while the dollar rose broadly as investors remained cautious about prospects of negotiations to end the near four-week Middle East conflict. MKTS/GLOB

Grain prices have broadly tracked fluctuations in crude oil during the war, reflecting the use of crops like corn in biofuels and exposure of crop production to rising energy and fertiliser costs.

Chicago wheat Wv1 also extended gains, with the U.S. market further supported by concern over hot, dry weather in wheat belts already facing drought. MKTS/GLOB

"Wheat markets are likely to remain volatile in the near term, with geopolitics and energy markets dictating direction," British merchant ADM Agriculture said.

"Attention will shift towards planting intentions, fertiliser usage, and upcoming U.S. data," it added, referring to U.S. planting and stocks estimates on March 31.

News towards the end of the session that major importer Algeria had booked wheat in a tender also lent support to the market. Traders said in early estimates that Algeria had bought around 690,000 tons at $272 a ton, cost and freight.

In first supply and demand projections for next season, the European Commission forecast that European Union soft wheat production would fall in 2026/27 but exports would rise.

($1 = 0.8675 euros)