Wheat trading finds a price floor in the futures market

After several weeks of sustained downward pressure, wheat futures markets in both Europe and the United States appear to have found a temporary floor. On Euronext in Paris, the September contract remains above the psychologically significant €200 per tonne mark, while wheat futures on the CBOT have also staged a technical recovery from their lowest levels in several months.Market participants stress that this stabilisation should not be interpreted as the beginning of a structural recovery. Rather, it is viewed as a pause within an otherwise prevailing downward trend. Fundamentally, the market remains caught between concerns over crop yields on the one hand and ample global supplies on the other. Geopolitical developments are also contributing to price volatility.On Tuesday, the September wheat contract on Euronext in Paris closed €1 higher at €201.75 per tonne, while the December contract gained €0.75 to reach €209.50 per tonne. On the CBOT in Chicago, soft red winter wheat for July delivery rose by 2 cents to $5.82¼ per bushel. The September contract added 1 cent to $5.96¾ per bushel, while December wheat edged up by half a cent to $6.14½ per bushel.Widening price gapThe price differential between Paris and Chicago has widened once again, reaching €12 to €14 per tonne. Based on current exchange rates, the September contract in Chicago equates to approximately €189 per tonne, while the December contract is valued at around €195 per tonne. In mid-May, the September contract was still trading at €215 per tonne. At that time, price levels in Chicago were broadly in line with those in Paris.In the United States, winter wheat crop ratings deteriorated again. Only 25% of the crop is now rated good to excellent, marking the lowest level for this time of year since the USDA began compiling these statistics in 1986. In particular, figures from Kansas and Oklahoma suggest that yields may fall short of earlier expectations. This development has provided some support to the market, as the US winter wheat harvest remains an important benchmark for global wheat pricing.Black Sea regionAt the same time, the market continues to face favourable production prospects in the Black Sea region. Russia is once again expected to harvest a sizeable export crop, while Ukraine has also improved its production outlook. Analysts at APK-Inform recently raised their forecast for the Ukrainian grain harvest, with wheat production in particular projected to exceed last season’s level. As a result, the global market may once again have access to substantial export volumes from the Black Sea region during the second half of the year. This expectation continues to limit the upside potential for prices.Weather conditions remain an important market factor. Rainfall is forecast across Ukraine, which is beneficial for summer crops such as maize but simultaneously poses risks for winter cereals. Prolonged wet weather increases the likelihood of fungal diseases, which can affect both yields and grain quality. Although these risks currently appear to be localised, traders are monitoring the situation closely, as quality issues during harvest can quickly influence prices.Import demand returningOn the demand side, there are signs that importers are returning to the market. Jordan has once again purchased wheat through an international tender, while Bangladesh has issued new buying tenders.Following the price declines of recent weeks, Western European wheat has become competitive once again in destinations across North Africa and the Middle East. French wheat in particular is benefiting from this improved competitiveness. Although export activity is not yet exceptionally strong, the increase in tender activity suggests that buyers are taking advantage of lower prices to replenish stocks.Limited movement in maizeAmong the other grain markets, maize continues to trade without a clear direction. On the one hand, the market is supported by persistently strong export demand for US maize. On the other hand, favourable growing conditions across the Midwest are capping any significant price gains. Rainfall and warm temperatures are creating near-ideal conditions for crop development, leaving little justification for the market to build in a weather premium.Oil prices support soybeansThe soybean market continues to be influenced largely by developments outside the agricultural sector. Higher crude oil prices are providing support to soybean oil and, indirectly, to soybean prices. At the same time, large export volumes from Brazil and favourable weather conditions in the United States are reinforcing expectations of ample supplies. As a result, there is currently no clear catalyst for a sustained upward move in the soybean market.