Wheat market oscillates between supply and transport risks

The wheat market has to choose between two extremes. On the one hand, ample stocks, cheap wheat from the Black Sea region and disappointing European export figures are putting pressure on the price. On the other hand, attacks on ports and ships around the Black Sea are creating a solid risk premium. For now, abundant supply carries the most weight, but with new disruptions the market can quickly turn. The December contract for wheat on the Matif closed Tuesday at €228.50 per tonne, a loss of €3.75. That meant seven of the last nine trading sessions ended in the red. On 22 July the market peaked at €247 per tonne, and last Friday the lowest point was reached at €228 per tonne. In Chicago, the September contract lost 12.5 cents and closed at $6.385 per bushel. The decline was partly caused by the lower oil price. Hope for a diplomatic breakthrough in the conflict around Iran took some of the tension out of the energy and commodity markets. Corn and soybeans were also pulled down with it. Still, oil is not the main factor for wheat. The core issue remains whether grain from Russia and Ukraine can actually reach buyers. Cheap wheat, expensive logistics Russian and Ukrainian wheat is being offered on the international market at competitive prices. Falling Russian FOB prices are for now offsetting part of the higher freight and insurance costs. That keeps West European wheat out of various export destinations. At the same time, the logistics situation is vulnerable. Ukraine's deep-sea ports around Odessa are heavily restricted and alternative routes via the Danube and rail have insufficient capacity. According to the Ukrainian agriculture minister, these routes can ultimately handle about half of the roughly 6 million tonnes that the country normally exports each month. Low water levels on the Danube are also causing additional problems. The market seems to be getting somewhat used to reports of attacks on ports and ships. As a result, new incidents do not automatically lead to major price increases. However, that calm may be deceptive. Once buyers start to doubt whether cargoes will actually be delivered, the focus can quickly shift from price to supply certainty. That risk is visible in international tenders. Jordan did not buy any wheat on Tuesday in a tender for up to 120,000 tonnes and has now issued a new tender. Meanwhile, the market is watching Algeria, an important destination for European wheat. The outcomes of these tenders provide an indication of the price differences between European and Black Sea origins. European exports are getting off to a slow start The European export figures offer little support. Since the start of season 2026/27, the EU had exported around 700,000 tonnes of soft wheat through 2 August. A year earlier that was 1.79 million tonnes, a decline of more than 60%. The figures are incomplete because of missing reports from, among others, France and Bulgaria. Even so, the difference from last season is too large to be explained only by reporting issues. The EU is clearly facing strong competition from cheaper grain from the Black Sea region. Notably, the physical market is holding up better than the futures market. In Germany, prices for feed and bread wheat rose by €5 per tonne on Tuesday. Since the price peak of 22 July, German feed wheat fell by only €7, while the September contract on the Matif lost about €24. That suggests that lots of the right quality and in the right location are less readily available than the futures market implies. The extremely low water level on the Rhine is making transport more expensive and can support regional premiums. The grain exchange in Groningen is increasing this week's wheat quotation by €2 to €210 per tonne. The price increase is attributed to disappointing yields. The regional exchange Zuid (Goes) increased by €1 to €210 to €220 per tonne. Large crops pressure corn On the futures markets, corn gave up ground again on Tuesday. The November contract on the Matif closed €2.75 lower at €246.25 per tonne. In Chicago, the December contract lost 7 cents and ended at $4.655 per bushel. On the European side, the market remains relatively tight. Yield expectations are moderate in parts of Europe and possible shortfalls in Ukrainian supplies are making importers nervous. Since 1 July, the EU has imported 1.26 million tonnes of corn, compared with 970,000 tons in the same period last season. Globally, supply looks more ample. StoneX expects production in the United States of 410.5 million tonnes, based on a yield of 184.8 bushels per acre. That is above the current USDA estimate of 406.4 million tonnes. On the other hand, the condition of US corn deteriorated for the third week in a row. Another 61% of the crop received a good to excellent rating. Brazil is also heading toward a record. AgRural estimates total production at 142.8 million tonnes. StoneX comes in at 141.5 million tonnes, clearly above USDA's 138 million tonnes. The high yields in Mato Grosso are especially notable. That is creating strong competition between Brazil, Argentina and the United States. For the Matif, European tightness provides support, but a lasting price increase remains difficult as long as the world market is well supplied. China provides a counterweight for soybeans Soybeans are also under the influence of the lower oil price, but are receiving support from new Chinese purchases. The most traded contract in Chicago fell Tuesday evening to $11.77 per bushel. USDA confirmed Tuesday the sale of 132,000 tonnes of US soybeans to China for delivery in 2026/27. That followed earlier reported Chinese purchases of about 1 million tonnes. The sales activity shows that China is willing to secure US soybeans after the recent price decline. The weather forecast for August remains decisive. Soybeans are in a crucial pod-setting phase and persistent heat or drought can still clearly weigh on yields. Chinese demand and US weather therefore provide a counterbalance to ample global availability and competition from South America.