PARIS: European wheat prices closed slightly higher on Wednesday after hitting contract highs earlier in the session, in a sign that traders were relieved that Algeria's latest wheat purchase would not be sourced from the Black Sea region.

Benchmark December milling wheat on Paris-based Euronext, closed 0.75 euro higher at 203.50 euros ($239.1) a tonne. It had touched a contract high of 204.00 euro in earlier trade.

Algeria's state grains agency OAIC purchased an estimated 600,000 tonnes of optional-origin milling wheat at around $263.50 a tonne C&F on Tuesday, European traders said.

The tender was the first open to Black Sea wheat, but only for higher protein wheat grades. Traders said they believed the wheat was likely to be sourced from the west of the European Union.

"Russian wheat is too expensive and the quality criteria will make it more difficult for them," one trader said. "But it could be harder for the French too with so little exportable surplus and prices quite high."

German wheat is often used to supply Algerian purchase tenders if French wheat is unavailable.

"With French export supplies so tight this year after the disappointing French crop, the Algerian purchase is anyway expected to be sourced from the Baltic States, Poland and Germany," one German trader said.

"I think the high Russian prices mean Germany and the other Baltic exporters will be able to continue shipments to Algeria in the next few months."

Farm office FranceAgriMer on Wednesday raised by 100,000 tonnes to 6.7 million tonnes its forecast for French soft wheat exports outside the European Union in the 2020/21 season, mainly encouraged by a pick-up in recent shipments.

It would still be 50% below the record volume exported last season with the fall mainly linked to a poor wheat harvest this year due to adverse weather.