Wheat market caught between weak demand and firmer Black Sea prices

Wheat prices are consolidating in a narrow range as weak US export demand contrasts with firm Black Sea prices and solid EU crop prospects, leaving futures in contango and rallies capped by ample old-crop supplies. The global wheat market is currently balancing sluggish import demand with selective buying in tenders and robust Black Sea exports. Disappointing US old-crop export sales highlight demand headwinds, while Algeria’s sizeable purchase and dynamic Russian shipments underline ongoing competition for export outlets. In Europe, French crop ratings remain historically comfortable, helping keep nearby MATIF values flat despite a visible risk premium further out the curve. Overall, fundamentals argue for a sideways to slightly soft tone near term, with weather and currency moves likely to drive the next directional impulse.

Prices & Futures Structure

On Euronext, front-month milling wheat for May 2026 trades around EUR 187.5/t, with a clear upward curve towards EUR 225–232/t for mid‑2027 and roughly EUR 239–240/t by late 2028, signalling comfortable nearby availability but higher uncertainty for future seasons. MATIF contracts were unchanged on 7 May, confirming a phase dominated more by spread and carry strategies than by strong outright direction.

CBOT wheat is modestly softer, with July 2026 around 610 US‑cents/bu, equivalent to roughly EUR 205–210/t, reflecting the recent correction lower in US futures. Physical export offers mirror this structure: French 11% protein wheat is indicated near EUR 270/t FOB Paris, US 11.5% protein CBOT‑linked wheat around EUR 190/t FOB, and Ukrainian 11% wheat roughly EUR 170/t FOB Odesa, keeping Black Sea origins at a clear discount.

Supply & Demand Drivers

US export demand remains the soft spot: old‑crop export sales reached only about 78,800 t, well below market expectations of 100,000–300,000 t, underlining that many importers are delaying purchases into the new‑crop window. New‑crop commitments of 187,500 t were at the upper end of expectations but do not yet change the overall picture of a cautious global buyer base.

At the same time, Algeria has injected some spot demand, buying an estimated 390,000–420,000 t of milling wheat in a recent international tender, at roughly USD 270/t (around EUR 230/t). Market participants assume a large share of this volume will originate from the Black Sea, underscoring Russia and Ukraine’s continued price competitiveness and their key role in supply to North Africa.

Fundamentals & Regional Developments

Russian export activity remains strong: preliminary data show April wheat exports near 3.95 Mt, about 65% above last year, with roughly 2.5 Mt expected for May. In parallel, export prices for 12.5% protein wheat for May delivery have climbed to about USD 242/t, or around EUR 206/t, the highest level since August 2025, signalling tighter margins for importers relying on this origin. Despite this strength, consultancy IKAR has cut its 2025/26 Russian wheat export forecast from 46.0 to 44.5 Mt, citing the stronger rouble and seasonal demand slowdown.

In the EU, crop conditions add a stabilising element. In France, 80% of soft wheat is rated good to excellent, slightly down from 81% a week earlier but still comfortably above last year’s 74%. Winter barley shows a similar pattern, with ratings easing to 76% but also well above prior‑year levels. These numbers support the idea of adequate European exportable surpluses, which, combined with subdued global demand, help cap rallies on MATIF.

Globally, recent USDA data confirm that record or near‑record production in 2025/26 has lifted stocks among key exporters, increasing the buffer against regional weather shocks. Nevertheless, regional imbalances and currency moves – notably a firm euro versus the dollar and rouble – are reshaping trade flows, with EU origin pressured by FX while Black Sea and North American exporters compete on price and freight.

Weather & Crop Outlook

Weather is not at crisis levels but remains a key watchpoint. In the US, winter wheat conditions have inched higher but remain historically weak for the time of year, keeping some risk premium in hard wheat markets. In Europe, current reports still describe largely favourable conditions for the 2026 harvest, with only limited deterioration in France’s crop ratings so far.

In the Black Sea region, earlier concerns about dryness have eased somewhat as logistics and weather allowed strong Russian shipments in April. Over the next few weeks, market focus will intensify on updated yield forecasts in Russia, Ukraine and the EU; any clear weather‑driven downgrade in one of these origins could quickly tighten the comfortable stock narrative, especially against the backdrop of already elevated Russian FOB prices.

Trading Outlook & 3‑Day View

• Producers (EU): Use price rallies driven by speculative buying and tender activity to extend hedge coverage for 2026 crop volumes, especially if local cash prices drift back towards or above recent highs around EUR 270/t FOB for 11% protein wheat.
• Importers (MENA/Asia): Continue to diversify origins between Black Sea and EU/US; consider scaling into coverage on dips in CBOT and MATIF, while monitoring Russian export policy and rouble strength, which could alter FOB competitiveness at short notice.
• Traders/Funds: The pronounced MATIF contango and soft nearby demand favour carry and spread strategies over outright directional longs; optionality around Russian export volumes and US weather offers asymmetric opportunities via call spreads rather than heavy futures exposure.

Over the next three trading days, MATIF nearby contracts are likely to trade sideways within a narrow band around EUR 185–195/t, barring a sharp shift in weather or currency. CBOT is expected to remain slightly heavy but broadly range‑bound near the EUR 200–210/t equivalent, while Black Sea export offers should stay firm, anchored by the stronger rouble and recent price highs in Russian FOB values.