Weather risk regains the upper hand on wheat market

This weeks grain market is moving in a field of tension between cautious buyers and ample availability on the one hand and rising weather and energy risks on the other. For wheat, that tension is most clearly visible. The futures market in Paris has recovered somewhat after a dip last week. On 21 April, May wheat on Euronext closed at €195.75 per ton and the September contract at €209 per ton. In Chicago, July wheat traded around $6.12 per bushel. That is not a breakout to a structurally higher market, but it is a sign that after earlier pressure the market is starting to price in some risk premium again. The main driver for wheat right now is the weather in the United States. The condition of US winter wheat deteriorated slightly over the past week. Oil prices also rose this week due to uncertainty surrounding the conflict between the US and Iran. At the same time, the upside for wheat remains limited for now because global supply this season is ample. That is also visible in trade: buyers are selective, tenders remain limited and competition between Europe and the Black Sea region is strong. Buyers are cautious and are aiming for lower prices once the war in the Middle East is over. Value of the dollar Also important for European wheat is the value of the dollar. This week the dollar has become slightly stronger. That works in favour of European exporters, as it makes them more competitive on the world market. The price difference between EU wheat and wheat from the US has narrowed over the past week due to a rise in Chicago and stabilisation in Paris. The May contract for soft red wheat now works out at €189 per ton. That means the difference with Paris has narrowed to about €6 per ton. For the new crop, the differences are larger. September is quoted in Chicago at the equivalent of €195 per ton and is therefore €14 below the level in Paris. The price difference between old and new crop on the futures market in Paris is also €14 per ton. That difference is larger than usual and is explained by higher production costs, including for fertiliser and energy. Locally, it remains stoic Local wheat quotations are not strongly affected by the fluctuations on the world market. Wheat is slightly lower this week than a week ago. Beurs Zuid lowers by €1.50 to €178 to €183 per ton. The Graanbeurs in Groningen quotes €191 per ton, €1 lower than last week. The price of feed barley remains stable this week: €192 per ton in Groningen and €175 to €180 per ton in the south.