Wheat under Pressure: Big Russian Crop, Weak Demand Cap Prices
Wheat prices soften amid strong Russian and local crops, slow import demand and reduced speculative length. Outlook stays slightly bearish near term.
Prices
European milling wheat futures on Euronext (MATIF) are broadly flat after recent declines, with the front Sep-26 contract last around EUR 201/t and a gentle contango out to May-29 near EUR 235/t. ICE feed wheat in the UK has eased further, with Jul-26 closing near the equivalent of about EUR 205–210/t after a 2% daily drop.
CBOT wheat futures in Chicago remain soft, with Jul-26 trading slightly lower on the day and sitting close to recent cycle lows, reflecting ample global supply and hesitant demand. Russian FOB 12.5% wheat is holding roughly in the mid-EUR 220s/t equivalent despite the higher crop outlook, while Ukrainian and French physical offers show stable to slightly weaker levels in EUR terms, consistent with the sideways futures structure.
Supply & Demand
Market sentiment is dominated by expanding supply prospects. Russian consultancy IKAR has raised its 2026 wheat harvest forecast to 91.5 million tonnes, up 1.5 million tonnes from the previous estimate, and now sees the export potential at 47.5 million tonnes for 2026/27. This reinforces expectations of continued aggressive Russian competition in global export markets.
At the same time, the US winter wheat harvest has started, adding physical supply, while weather across much of Europe has recently been favorable for crop development. Import demand, however, remains subdued: many traditional buyers are holding back in anticipation of potential de‑escalation in the US–Iran conflict and further downward pressure on prices. Tunisia and Jordan have issued tenders that serve mainly as price tests rather than signs of a broad-based demand surge.
Local harvest strength in import-dependent regions is another bearish driver. North Africa and the Near & Middle East report good crops this season. Egypt, in particular, has already procured about 4.3–4.4 million tonnes of domestically produced wheat since mid‑April, the highest volume on record and roughly 15% above the same period of 2025 and 37% above 2024. This record local procurement reduces Egypt’s short‑term import needs and underlines the more comfortable global balance for 2026/27.
Fundamentals & Positioning
The combination of strong supply signals and weak demand is clearly reflected in speculative behavior. On Euronext, financial investors have trimmed their net long position in milling wheat futures and options sharply, from 93,833 contracts to 50,324 contracts in the week to 29 May, signaling a substantial reduction in bullish bets. Commercial participants have simultaneously cut their net short exposure from 79,658 to 30,659 contracts, suggesting they are less inclined to hedge forward sales aggressively at current price levels.
This positioning shift points to a market that has largely priced in the bearish supply news but lacks a clear catalyst for a rebound. The upcoming USDA weekly export report for the period to 28 May is expected to show anything from a small net reduction of old‑crop US wheat export commitments to only modest new sales, underlining the tepid demand backdrop. Trade estimates for 2025/26 range from –200,000 tonnes to +100,000 tonnes, while new‑crop 2026/27 sales are seen at 250,000–600,000 tonnes.
Weather & Regional Outlook
Weather remains broadly favorable in Europe and Russia, supporting yield expectations and reinforcing the negative tone on prices. Russian conditions have been described as very good for wheat, backing the upward revisions to production estimates. In North Africa and parts of the Middle East, the season has also been kind, contributing to the strong local harvests already evident in Egypt’s record procurement.
In the US, while the winter wheat harvest is now underway in several states, the broader season has been mixed, with earlier concerns over dryness in parts of the Plains. Nevertheless, the immediate market focus is on the physical flow from the first harvested areas rather than on production risks. Over the next week, no major disruptive weather pattern is currently in sight for the main Northern Hemisphere wheat belts, which further supports the idea of comfortable supply into the new marketing year.
Trading Outlook
- Bias: Slightly bearish in the short term, with rallies likely capped by strong Russian export potential and good crops in North Africa/Middle East.
- For importers: Gradual, scale‑down buying on dips appears prudent rather than aggressive front‑loading, but excessive waiting carries the risk of a geopolitical or weather shock reversing sentiment.
- For exporters/farmers: Consider limited forward hedging on modest price upticks, as current levels already reflect a heavy fundamental picture but could weaken further if weather stays benign.
- For traders/speculators: With speculative length already reduced, fresh short positions should be sized cautiously and focused on selling rallies towards key resistance levels rather than chasing new lows.
3‑Day Price Indication (Directional)
- Euronext (MATIF) milling wheat: Slight downside to sideways (pressure from Russian and EU supply, but some support from commercial buying on breaks).
- CBOT wheat: Mildly bearish bias, with potential to test recent lows if USDA export data disappoints and global demand remains muted.
- Black Sea FOB (Russia/Ukraine): Largely stable in EUR terms, with strong competition keeping offers tight but not significantly lower in the very short term.