Wheat Futures Rebound Modestly – China Weather Risks and Short Covering Provide Support

Wheat prices firmed slightly on Tuesday, led by gains in contracts for the 2025 harvest on Euronext and CBOT. Short covering by funds and heat concerns in China’s key wheat-growing region helped lift prices, though strong supply fundamentals in the U.S., EU, and Russia continue to limit upward momentum.

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1. Market Overview: Exchange Prices & Trends

Contract	Closing Price	Change	% Change
Euronext Sep 2025	€205.50/t	+€3.25	+1.61%
CBOT Jul 2025	536.00 ct/bu (€176/t)	+4.75 ct	+0.90%

After Monday’s losses, both exchanges saw recovery driven by weather concerns and speculative activity.

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2. Key Market Drivers & Influencing Factors

Funds Cover Shorts on Technical Bounce

Commodity funds:

• Took advantage of recent lows to close short positions
• The rally was largely technical, as fundamentals remain soft

Speculative activity was the primary driver of Tuesday’s price recovery.

China Heat Warning Raises Supply Concerns

China’s Henan province (1/3 of national wheat production):

• Heat warning issued for May 11–13
• Temperatures are expected to exceed 35°C, risking heat stress on crops

China holds large stocks, but a poor harvest could trigger imports later this year.

Russia Raises 2025 Output Forecast

IKAR (Moscow-based consultancy) now expects:

• 2025 wheat output: 83.8 Mt (up from 82.5 Mt)
• 2025/26 wheat exports: 41.3 Mt (up from 40 Mt)

Stronger Russian production outlook reinforces bearish mid-term sentiment.

U.S. Crop Conditions Continue to Improve

USDA Crop Progress (Apr 29):

• 51% of winter wheat rated good/excellent (+2 pp Wow)
• Best rating for this time of year since 2020
• Drought area shrinks to 23%, from 33% last week

U.S. wheat outlook remains strong, keeping gains in check.

EU Export Momentum Improves Slightly

EU Commission data (to May 4):

• EU soft wheat exports: 17.81 Mt (–34% YoY)
• Weekly increase: +174,000 t
• Germany: 2.20 Mt
• Morocco now EU’s #1 customer: 2.60 Mt
  ↳ Surpassed Nigeria (2.41 Mt)
• Weekly Morocco sales: 133,000 t (previous week: 117,000 t)

Morocco remains a rare bright spot in an otherwise slow export season.

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3. Price Forecast (May 8–10, 2025)

Contract	Expected Range
Euronext Sep 2025	€203 – €207/t
CBOT Jul 2025	534 – 541 ct/bu (€175–€177/t)

The market may remain range-bound until export rumours are confirmed or weather risks escalate.

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4. 14-Day Weather Outlook – Key Regions

China – Henan Province

Current: Rising heat stress
Forecast:

• Heatwave (May 11–13): +35°C
• Very limited rainfall

Weather here could influence global demand if crop stress worsens.

USA – Plains

Current: Strong ratings
Forecast:

• Continued improvement in soil moisture
• Stable growing conditions

EU – Western and Central Europe

Current: Improving conditions
Forecast:

• Rainfall supports crop recovery
• Seasonal temperatures aid growth

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5. Market Data Highlights

Region	Net Short Position	Weekly Change
CBOT Wheat	89,929 contracts	–6,510
KC Wheat	56,624 contracts	+9,252

Export Prices (FOB, USD/t)	U.S. SRW (Gulf)	Ukrainian (11.5%)
May 2025	$228–232 (€201–205)	$239–242 (€211–214)

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6. Conclusion & Strategic Recommendations

Key Takeaways:
Tuesday’s gains were mostly technical, led by fund activity
Weather stress in China helped stabilise sentiment
Russia’s production upgrade and strong U.S. crop weigh on outlook
EU export pace remains slow despite Moroccan demand

Recommendations:
Producers: Use rallies to lock in sales if conditions stay favourable.

Buyers: Monitor Moroccan and North African demand as a signal for price shifts
Traders: Keep close watch on Chinese weather and export tenders from Egypt & Morocco

Wheat remains vulnerable to weather surprises, but heavy supply and improving global crops cap upside.