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PARIS: Euronext wheat climbed around 3% on Wednesday to a three-month high as news of a massive import deal by Egypt added support to a market already wrestling with weather and war risks.

December wheat on Paris-based Euronext settled up 2.7% at 233.75 euros ($258.18) a metric ton, after earlier reaching its highest since early July at 235.00 euros.

Short covering by investment funds has contributed to the price move, traders said. Financial investors already narrowed their net short position in Euronext wheat last week, data showed. Egypt’s state grains buyer has agreed one of its largest ever direct wheat deals for monthly supplies from November to April, two sources with direct knowledge of the matter told Reuters.

Around 510,000 metric tons of Black Sea origin is to be supplied per month, totalling up to 3.12 million tons over the period, one of the sources said. Traders said the reported volume buoyed a market that has already been speculating about possible Russian export restrictions later in the season as the country faces drought conditions for sowing.

The country’s grain exporters’ union called for a quota mechanism to limit shipment due to what it sees as excessive exports at the start of the 2024/25 season.

A Russian drone attack that damaged a grain facility in Ukraine near its Danube river border with Romania, according to Ukrainian officials, also underscored war risks as grain markets also monitor military escalation in the Middle East. Cheaper prices for Russian and other Black Sea wheat have supported brisk shipments.

Russian 12.5% protein wheat for October Black Sea shipment wheat was on Wednesday quoted around $222-$225 a ton FOB, up from $220-$223 on Tuesday. Russian 11.5% wheat rose to around $219-$220 a ton FOB, above Ukrainian at $217-$218 a ton.

Despite the rise, Russia was still far below EU prices, with German and Baltic 12.5% around $30 a ton FOB more expensive than Russian and Romanian 12.5% about $18-$20 over Russian, traders said. “High Russian export flows continue, with a lot of market debate about the possibility of restrictive Russian export quotas early in the new year along with concern about drought,” a German trader said.

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