Wheat Rallies on US Drought Fears While EU Faces Heavy Stocks

US wheat futures have rallied on mounting drought stress in the southern Plains, pulling Euronext prices higher, while a weaker euro and firmer crude oil add support. At the same time, sluggish EU export dynamics point to rising ending stocks, likely limiting upside for the 2026/27 new-crop complex despite current weather concerns.

Wheat in the southern US Plains remains under pronounced drought pressure just as crops enter critical development stages. Only 30% of US winter wheat is still rated good to excellent, with conditions deteriorating further in key states such as Kansas and Texas. Nearby Euronext contracts followed the CBOT move but old-crop cash prices in Europe remain subdued amid soft export demand and an increasingly burdensome EU balance sheet.

📈 Prices & Spreads

Futures rallied on the back of US weather and macro support, but the curve continues to price in comfortable medium-term supplies:

• Euronext wheat (MATIF): May 2026 trades around EUR 197/t, with Sep 2026 at EUR 214/t and Dec 2026 at EUR 223/t, reflecting a firm carry into the 2027–2028 contracts near EUR 231–235/t.
• CBOT wheat: July 2026 hovers around 657 USc/bu (~EUR 227/t equivalent), slightly below recent highs after a strong weather-driven run.
• German cash: Feed mills in South Oldenburg pay about EUR 204/t for May feed wheat, rising to EUR 219/t for September delivery, signaling a modest risk premium for the new crop.

Market	Delivery	Price (EUR/t)	Comment
Euronext Wheat	May 2026	197	Old crop, capped by weak exports
Euronext Wheat	Sep 2026	214	New crop, weather risk premium
Germany Feed Wheat	May 2026	204	Cash bids slightly reduced
Germany Feed Wheat	Sep 2026	219	New crop bids slightly higher

🌍 Supply, Demand & Weather

US production risk is the main bullish driver at present. Winter wheat in the southern Plains suffers from ongoing moisture deficits just as heads are forming: in Texas, 65% of winter wheat has already headed, with 53% in Kansas and Oklahoma, raising fears that drought damage is already irreversible in parts of the belt.

Ratings remain stagnant at only 30% good to excellent nationwide, and local assessments in Kansas and Texas have worsened further. Over the next seven days, forecasts show generally cool, mostly dry conditions in Kansas with only limited showers, while Oklahoma and especially Texas are expected to see several rounds of rain and thunderstorms. However, given the advanced development of the crop, any late moisture in Texas and Oklahoma may only partially mitigate yield losses.

Outside the US, global wheat availability still looks comfortable. EU soft wheat exports since the start of the 2025/26 season reached 19.28 million tonnes by 24 April, modestly above 18.10 million tonnes a year earlier but still well short of the pace needed to meet the EU Commission’s 28 million tonne export forecast. With just over two months left in the marketing year and some export data from France and Bulgaria still incomplete, a downward revision of the official export outlook appears likely, implying higher ending stocks.

📊 Fundamentals & Macro Drivers

The widening gap between resilient US weather risk and increasingly heavy EU stocks defines the current fundamental backdrop. While US drought is providing a clear short-term floor to world prices, the prospect of higher EU ending stocks is already weighing on forward values for the 2026/27 crop.

Export demand for old-crop EU wheat remains lackluster, limiting basis improvements despite futures strength. This is reflected in cash markets, where old-crop bids have in some cases been slightly reduced even as new-crop futures tick higher. In parallel, FOB indications show a mild softening over recent weeks for key origins such as France and Ukraine, underscoring the competitive environment on the export side.

Macro factors add another layer of support. Agricultural markets are underpinned by higher crude oil prices as ongoing tensions between the US and Iran and disruptions in the Strait of Hormuz tighten global oil supply. Higher energy costs feed into freight, drying, and input costs, supporting grain price floors and maintaining interest from speculative capital in the broader commodity complex.

📆 Short-Term Outlook & Trading Ideas

In the near term, the market is likely to remain highly sensitive to US weather headlines and any adjustment to EU export projections. The combination of drought risk in the US Plains and a structurally heavy EU balance sheet suggests continued volatility but with limited room for a sustained rally unless US crop losses deepen or Black Sea exports are disrupted.

• Producers (EU): Use current new-crop strength (Sep MATIF > EUR 210/t) to scale in incremental hedge sales for 2026/27, especially where farm margins are positive at these levels.
• Feed users: Maintain a balanced coverage strategy; consider extending coverage into early 2027 on price dips, given upside risk from US yield uncertainty and energy markets.
• Traders: The old/new crop spread remains a key theme; strategies that are long nearby US contracts versus short deferred EU wheat may continue to perform if US weather risk persists while EU stocks build.

📍 3‑Day Regional Price Indication (Directional)

• Euronext (MATIF) Wheat: Slightly firmer bias in nearby contracts, tracking CBOT and weather risk, but gains capped by EU export overhang.
• CBOT Wheat: Elevated and volatile; direction driven mainly by updated drought assessments and short-term rainfall in the southern Plains.
• EU Cash Wheat (Germany/France): Old crop broadly sideways to slightly weaker; new-crop bids cautiously firmer but vulnerable if EU export expectations are officially revised lower.