Wheat prices under pressure as EU crop improves despite U.S. and Argentina setbacks

Prices remain under downward pressure on European exchanges as strong EU crop prospects and softer import demand outweigh weather‑related losses in the U.S. and a smaller Argentina crop. Short-term rallies on CBOT from U.S. drought news have not translated into a sustained move on Euronext, where the forward curve still signals comfortable supply. International wheat prices currently reflect a market that is moving from last season’s record availability into another broadly well-supplied year. Despite a sharply lower U.S. harvest forecast and drought-stressed yields in Kansas, increased soft wheat output in the EU and good harvests in key importing countries are capping upside. Morocco’s suspension of soft wheat imports in June–July and lower Argentina output add regional volatility, but without fundamentally tightening the global balance yet.

Prices & Term Structure

Euronext (MATIF) wheat futures closed unchanged on 15 May, with the nearby Sep 2026 contract at about EUR 210/t and Dec 2026 around EUR 219/t. Further out, prices edge up toward EUR 233–234/t for 2028–2029 delivery, indicating only a modest carry and no acute supply stress.

On CBOT, winter wheat rallied on 18 May, with Jul 2026 up roughly 2.8% and deferred 2026/27 contracts gaining around 2–2.5%, as traders reacted to worsening U.S. crop prospects. ICE feed wheat in the UK moved lower by around 1.3% on 15 May, aligning with the softer European tone. Physical FOB offers broadly mirror this picture: French 11% protein wheat ex-Paris is steady near EUR 0.29/kg (≈EUR 290/t), U.S. wheat around EUR 0.21/kg, while Ukrainian origins remain the cheapest at about EUR 0.18–0.25/kg depending on quality and location.

Supply & Demand Drivers

European supply is the key bearish force. A consultancy has slightly raised its EU soft wheat crop forecast to about 128.8 million tonnes, with particularly strong expectations in Romania, Bulgaria, and Spain. Recent rains and mild temperatures across much of the EU have improved growing conditions and support the view of a comfortable 2026/27 balance.

Globally, the USDA’s latest WASDE report points to a notable decline in U.S. wheat production in 2026/27, which sparked a strong price reaction earlier in the week. Yet, despite the U.S. cut, world wheat availability is still projected as ample, following a record previous season and solid crops in several importing regions. Good local harvests in many buyer countries are also curbing import needs and leading to a softer demand outlook.

Regional Highlights & Fundamentals

🇺🇸 United States: Drought-hit but still a price setter

The Kansas Wheat Quality Council tour estimates state yields at about 38.9 bu/acre, the weakest since 2023 and far below the five-year tour average of 45.5 bu/acre. This follows a prolonged drought and aligns with the USDA’s Kansas projection of roughly 37 bu/acre and a winter wheat crop of about 214.6 million bushels, some 38% below last year’s 346.8 million bushels and well under the 2025 yield of 51 bu/acre.

Even so, U.S. export demand is only gradually improving. The latest weekly export report shows old-crop sales of about 133,000 tonnes, above both the prior week and last year’s comparable week, with Indonesia and the Philippines as key buyers. New-crop sales of roughly 221,000 tonnes are the second-highest so far this marketing year but still around 70% below the same week a year earlier, underscoring muted global appetite at current price levels.

🇪🇺 European Union: Strong soft wheat crop ahead

In the EU, rains and moderate temperatures are underpinning yield potential. The slight upgrade of the soft wheat production outlook to 128.8 million tonnes confirms a comfortable supply base. Particularly good harvest expectations in Romania, Bulgaria, and Spain add to exportable surpluses and help offset cuts elsewhere.

French FOB prices around EUR 290/t for 11% protein wheat remain competitive but not aggressive, reflecting that farmers are in no rush to sell heavily at current levels, while buyers face less urgency amid strong crop prospects. For now, Euronext futures seem to price in a near-normal harvest with only limited weather risk premium.

🇦🇷 Argentina: Smaller crop, but still historically high

Argentina’s 2026/27 wheat crop is projected at about 21.3 million tonnes, down roughly 23–24% from the previous season according to the Buenos Aires Grain Exchange, but still the third-highest on record. Sown area is expected near 6.5 million hectares, about 200,000 ha less than last year, with planting due to begin in the coming days.

Alternative forecasts are more conservative: Rosario’s exchange recently suggested 18–19 million tonnes, while USDA’s WASDE put the crop at around 21 million tonnes. This range highlights some downside risk if weather disappoints, but even the lower end would keep Argentina a major supplier into Atlantic and African markets.

🇲🇦 Morocco & Importer Demand Shifts

Morocco will suspend soft wheat imports from 1 June to 31 July, with the harvest expected to rise sharply from about 3.5 to 7.5 million tonnes after abundant rains ended a seven-year drought. This policy move had been widely anticipated and aims to protect domestic producers and manage stocks during harvest.

For exporters, the temporary closure of an important North African demand outlet removes a seasonal buyer from the market and reinforces the theme of weaker import demand. Stronger local crops in several other importing countries in North Africa and Asia are likely to have a similar dampening effect on global trade flows.

Weather & Short-Term Outlook

Weather remains a key swing factor. In the EU, the current pattern of regular rainfall and mild temperatures is broadly favourable for wheat development, with limited signs of heat or drought stress at this stage. The main risks over the next weeks are localized excess moisture and potential disease pressure rather than widespread yield loss.

In contrast, parts of the U.S. Plains, including Kansas, continue to contend with lingering drought effects, which have already been reflected in the reduced yield estimates. In the Southern Hemisphere, Argentina’s upcoming planting campaign will be sensitive to moisture availability; any emergence of dryness or excessive rain later in the season could shift market sentiment, but for now these risks are mostly priced as background tail risks.

Trading Outlook & Strategy

• For importers: The combination of strong EU crop prospects and generally ample global supplies argues for a patient, scale‑down buying strategy. Consider covering near-term needs but avoid over-committing at current futures levels, especially while weather in major exporters remains mostly favourable.
• For exporters/marketers: With FOB Ukraine and some other Black Sea origins offering the most competitive prices, margin protection is key. Use rallies triggered by U.S. weather headlines to hedge forward sales rather than waiting for a sustained bull run that current fundamentals do not support.
• For producers in the EU: Given the flat to slightly carrying forward curve on Euronext and strong crop prospects, staggered selling into strength appears prudent. Retaining some unpriced tonnage for potential weather-driven spikes later in the season offers optionality without excessive exposure.

3‑Day Price Indication (Directional)

• Euronext wheat (Sep & Dec 2026): Slightly bearish to sideways in EUR terms, with good EU crop news and subdued import demand likely to cap any weather-driven upticks.
• CBOT wheat (nearby): Volatile but with a mild upward bias as the market continues to absorb U.S. drought damage; however, upside may struggle without fresh bullish surprises.
• Physical FOB EU & Black Sea: Broadly stable in EUR over the next few days, with competitive Ukrainian offers anchoring the lower end of the range and EU values tracking Euronext.