Wheat Market Report: Shifting Sentiment Amid Weather Risks and Geopolitics

The wheat market is riding a wave of mixed signals as early June unfolds. The Euronext closed slightly firmer on Wednesday, with the front-month September contract notching a modest gain of 1 EUR at 203 EUR/t, but sentiment across the Atlantic was more bullish—CBOT July wheat futures surged up 7.25 cents to 543.25 cts/bu. This divergence reflects a global market caught between technical recoveries, weather uncertainty, and volatile geopolitics. Short covering by financial investors at CBOT provided upward momentum, as renewed fears of conflict escalation in Ukraine and drought concerns in northern China reignited worries about global supply security. Meanwhile, ample rainfall in Central Europe has tempered drought fears, but a firmer Euro and generally tepid export outlook continued to weigh on Euronext prices.

Egypt’s key grain buyer is signalling a strategic shift away from Russian wheat, increasing opportunities for French, Romanian, Australian, and Argentine exporters. Meanwhile, speculative investors on European markets have increased their net short positions, while commercials have expanded their net longs, reflecting diverging market expectations. The upcoming USDA export report, combined with ongoing harvest delays in the southern U.S. due to rain, as well as drought impacts in parts of China, all contribute to a market at a crossroads—balancing risk and opportunity as the 2024/25 marketing year unfolds.

📈 Prices

Exchange	Contract	Last Price	Weekly Change	Currency	Market Sentiment
Euronext (MATIF)	Sep 25	203.00	+1.00	EUR/t	Neutral/soft
CBOT	Jul 25	546.75	+7.25	US-Cent/bu	Short covering, upward bias
ICE (UK, feed wheat)	Jul 25	158.35	-0.15	GBP/t	Soft

Spot Export Prices (FOB)

Type	Origin	Price	Prev. Price	Currency	Update Date
Wheat 11.5% (CBOT)	US	0.24	0.23	USD/lb*	2025-06-05
Wheat 11% (Paris)	FR	0.28	0.27	EUR/lb*	2025-06-05
Wheat 11% (Odesa)	UA	0.20	0.20	USD/lb*	2025-06-05

*LB as per offer table unit; contract/spot markets use t/bu/t

🌍 Supply & Demand

• Global Supply Risks: Heightened by Sino-Ukraine weather and geopolitics, but no Black Sea export interruptions reported yet.
• Harvest Update: US southern harvest delayed by rain; China’s wheat affected by drought, but irrigated areas less impacted.
• Egyptian Demand: State buyer diversifying away from Russian wheat, with likely increases in procurement from the EU and southern hemisphere origins.
• Inventory & Specs: Euronext speculators extended net shorts to 257,945 contracts (vs. 230,892 prior week); commercials added more net longs (252,482 vs. 226,365).

📊 Fundamentals

• USDA Export Outlook (week to 29 May): Old crop: -200,000t to +100,000t net; New crop: +300,000t to +800,000t expected.
• EU Crop Conditions: Ongoing rainfall has improved drought outlook in western/central Europe—yield loss risk reduced, but quality concerns in some saturated areas may emerge.
• Speculative Positioning: Speculators remain heavily short in Europe, hinting at a market vulnerable to short-covering rallies if fundamentals tighten.

🌦 Weather Outlook

• Europe: Persistent rain in western/central zones expected over the next 5 days. Crop conditions moving from drought risk to local saturation—yield outlook broadly positive, but some quality risks in waterlogged fields.
• US Plains: North—rain improving yield potential; South—wet harvest hindering quality. Next 3 days: More precipitation in the US South, ongoing delays likely.
• China: Northern regions remain dry. Non-irrigated fields are suffering, risk of further yield cuts if dryness persists.
• Black Sea: Ukraine and Russia with typical late-season volatility, but no new export disruptions so far.

🌎 Global Production & Stocks

Country	2023/24 Output (m t)*	Change vs. 22/23	Ending Stocks (m t)*
EU	131	-3	16.8
Russia	90	-13	16 (est.)
US	48	+2	16
China	137	0	140
Australia	29	-6	4.8
Argentina	15	-2	2.6

*Estimates, subject to USDA June revisions

📌 Trading Outlook & Recommendations

• Short term: Monitor for volatility around USDA export data and Ukrainian/Russian headlines—short squeezes possible on further escalation.
• For Exporters: French, Romanian, and Black Sea wheat may see incremental demand as Egypt diversifies. Consider locking in forward sales on price strength.
• For Importers: Keep an eye on US and EU harvest/weather; opportunistic purchases possible if harvest delays pressure quality, or if speculative shorts unwind in Europe.
• For Producers: Southern US: manage risk on rain-related quality downgrades. Central Europe: Focus on quality control after heavy rainfall.
• Speculators: Heavy net shorts in Europe are a red flag for sharp reversals if weather/geopolitics worsen.

📆 3-Day Regional Price Forecast

• Euronext (Sep 25): 202–206 EUR/t — Slight upward bias, weather & Euro movement in focus.
• CBOT (Jul 25): 544–553 cts/bu — Tight range, watch for post-report volatility.
• ICE (UK, Jul 25): 157–160 GBP/t — Stable, with modest downside risk from global sentiment.