European wheat futures declined on Tuesday as traders assessed the risks of Black Sea export disruptions. The market was reacting to a decline in oil prices. December wheat, which is the most active position on Paris' Euronext exchange, settled 1.6% lower at EUR283.50 (US$326.59) per metric ton. Oil prices dropped to their lowest level in three weeks after remarks by Qatari officials and U.S. officials sparked hopes of a diplomatic solution to the Iran War that could improve oil flow through the Strait of Hormuz.

A futures broker stated that "Agricultural markets remain'sensitive' to such news," in reference to the reported progress toward resolving the Iran conflict. The wheat market is more concerned with the military escalation that has occurred in the Black Sea region as Russia and Ukraine have been attacking each other's ships and ports.

One German trader stated that the market seemed to be "hardening" to the daily reports of Russian and Ukrainian attacks on ports and ships.

"The implications of global supplies remain very serious, but there is also expectation that both countries will find alternative export routes." Market participants were waiting to see the result of an?tender held by Algeria, a major wheat importer on Wednesday.

The trader stated that "Russian and Ukrainian Wheat are cheap on export markets. They are way below the prices in the west EU." The question is if a shipment can be made during the war. Traders report that Tunisia warned that in a recent tender, suppliers of Black Sea grains could not invoke force majeure under any circumstances due to the conflict. They must instead source grain from other origins. Weekly European Union data showed that the bloc's soft?wheat?exports had fallen 61% since the beginning of the season on July 1. However, figures for some countries were still incomplete.

(source: Reuters)