European Union countries could see more grain export demand if attacks on Black Sea ports and ships disrupt Russian and Ukrainian sales, traders and analysts said on Thursday.

Wheat prices have surged this week, with U.S. futures reaching two-year highs and Euronext wheat rising to 17-month highs on concerns that attacks on shipping and port infrastructure could hinder exports from the two leading wheat suppliers at a time of tight markets.

"The European Union could benefit from a slowdown in Russian/Ukrainian exports but there is not a large exportable surplus in the EU," said Benoit Fayaud, senior grain analyst at consultancy Expana.

The attacks mark a departure in the war during which Russia and Ukraine generally avoided strikes on grain export ships and port terminals despite the end of the U.N.-brokered Black Sea grain shipping agreement in 2023.

Tensions escalated after Ukrainian drones struck shipping in the Sea of Azov, which handles around a quarter of Russian grain exports. Russia also struck Ukrainian ports and shipping this week, reducing export capacity and prompting some shipowners to stop sending vessels to Ukraine.

BULGARIA AND POLAND COULD BE FIRST BENEFICIARIES

Based on current prices, Fayaud said any shift in demand could first benefit Bulgaria and Poland, then Romania, Germany and France, although France does not have a large exportable surplus this year.

Russian and Ukrainian wheat exports have displaced Western European supplies in major import markets including Egypt, Algeria and Saudi Arabia in recent years. Some traders believe prolonged disruption could allow EU exporters to regain sales.

"This may also enable us to regain access to markets, at least for a period of time, especially since initial feedback indicates grain quality is rather high," said Benoit Pietrement of French farm agency FranceAgriMer. "With an early harvest, it means we can get started sooner."

Traders said Russian grain exports should continue but at higher transport costs and with longer transit times if restrictions in the Azov Sea persist, reducing competitiveness of usually cheap Russian wheat.

Ukrainian exports face greater risks as repeated attacks disrupt port operations and increase security concerns for shipowners.

"If disruptions persist, demand is unlikely to shift to one single origin," one trader said. "I would expect buyers to diversify purchases."

"Romania and Bulgaria would probably be the first beneficiaries due to geographical proximity and similar freight economics. France and other Western EU origins could gain market share, particularly for Mediterranean and North African destinations."

Ukraine is also a major supplier of corn to the EU. Reduced sea exports could increase reliance on overland transport routes through eastern Europe.

(Reuters)