Euronext wheat rose for a second time on Wednesday. The move was boosted by an Algerian large purchase, and the news of a Russian drone attack on its main Black Sea port, which rekindled concerns about war.

The December wheat futures on Euronext’s Paris-based market were up 0.4% at 1436 GMT, and now trade for 190.75 Euros ($223.90 per metric ton).

The most active contract on Euronext recovered from the contract low of 187.75 euro, which was hit during Tuesday's trading session.

The Euronext price also saw support from the weaker euro, and a slight increase in Chicago wheat prices. Chicago wheat was also nearing contract lows.

The wheat markets were under pressure due to the rising global supply and Monday's announcement that Argentina will temporarily suspend its grain export tax in order to increase dollar-generating sales overseas.

The recent price drop and the increasing volume of grain purchased by Algeria at an import tender held on Tuesday has led to expectations that buyers will take advantage.

European traders reported on Wednesday that Algeria's state grain agency OAIC was believed to have bought between 600,000 metric tonnes and 700,000 metric tonnes of milling wheat.

Algerians preferred to buy wheat from the Black Sea region, in part because French wheat was excluded due to an ongoing diplomatic dispute between Paris and Algiers.

One German trader stated that "Algeria’s tender is another reminder of the amount of wheat Ukraine and EU Black Sea countries have to offer."

It is good to see that one of the biggest buyers of imports has returned after a long time of low demand. It is hoped that other Middle Eastern buyers will also be issuing tenders in the near future.

The news of a Ukrainian drone attack on the southern Russian city of Novorossiisk that killed two people also rekindled concerns about a possible disruption of grain trade due to the conflict between Russia and Ukraine.

The Federal Agency for Sea and Inland Water Transport reported that no damage had been reported to the port infrastructure or vessels at Novorossiisk on Wednesday. Reporting by Gus Trompiz and Michael Hogan, Hamburg. Editing by Tasim Zaid.

(source: Reuters)