UPDATE 2-Euronext says working on Black Sea wheat futures

* CBOT as world wheat price driver is declining

* U.S. farmers increasingly turn to corn, soybean

* Black Sea, EU production swings become big price drivers (Rewrites throughout, adds comments)

GENEVA, April 8 (Reuters) - The rising influence of Black Sea markets on world prices prompted Euronext to start working on developing futures contract that would allow price hedging in one of the world’s largest export zones for the grain, it said on Friday.

Production swings in the Black Sea and European Union have become the main drivers of world wheat prices to the detriment of Chicago futures as U.S. farmers increasingly turned to corn and soybean crops, analysts and traders said.

“Having assessed the long-standing need for a proper price-setting mechanism in that production zone, we are now engaged in a serious reflection about a careful design,” Euronext head of commodities Olivier Raevel told Reuters at the Cereals Europe conference in Geneva.

He declined to give details about the project, which would be in addition to Euronext’s western European milling wheat contract <0#BL2:>. The exchange suspended trading in its premium milling wheat futures last month due to a lack of liquidity.

The Chicago Board of Trade (CBOT), operated by CME Group , has historically served as a benchmark for global grain and oilseed prices including corn, wheat and soybeans.

But the importance of the CBOT as world wheat price driver is declining as Black Sea and Europe dominate world wheat markets, AgResource President Dan Basse told the conference, adding that wheat harvests in the Black Sea region were rising in quantity and quality.

“We are lacking a good Black Sea hedging solution today,” he said.

The European Union is the world’s largest wheat producer and exporter. Russia comes second in terms of wheat exports and Ukraine is fifth.

CME, the world’s largest futures exchange, launched Black Sea futures in 2012 but the contract failed to pick up due to a lack of liquidity. There is no delivery open for trading beyond this summer. <0#1BSW:>

CME has since turned to western Europe. It has been working on EU wheat futures for about two years but the project has been delayed by contract issues with silo operators in France.

Swithun Still, director of Solaris which specialises in the trade of Russian agricultural commodities, said a Euronext Black Sea wheat contract should ideally focus on one origin, as opposed to CME’s contract which includes several.

“One option could be to have a Black Sea milling wheat futures with 12.5 protein FOB Novo,” he said, referring to Novorossiysk, Russia’s grain export hub on the Black Sea.

Ukrainian maize futures would also be useful, he said.

Michel Portier, head of French consultancy Agritel, said a Black Sea contract would only be workable if countries in the region eased financial-flow regulations which currently hamper trade. Agritel has a branch in Ukraine.

U.S. wheat exports have been waning as farmers increasingly turn to more profitable corn and soybean crops, analysts said.

The country dropped to fourth place in terms of wheat exports last season, U.S. Department of Agriculture data showed.

“The market is not done in Chicago anymore, prices of the European continent have taken the leadership of the world wheat market,” Portier said.

Reporting by Sybille de La Hamaide; editing by David Clarke and Susan Thomas