In uncertain times, currency trading focuses on safe havens. This, combined with rising oil prices, causes the dollar to appreciate, which in turn makes European wheat more competitive on the international market.
The euro's value has fallen to $1,16, a significant difference from the $1,20 it reached at the end of January. This gives European wheat greater opportunities on the international market. Whether exporters will be able to capitalize on this is another matter.
While the rising dollar improved the competitiveness of EU wheat on Tuesday, the European Commission concluded that the export prospects for wheat are still smaller than previously thought. In a new forecast, the Commission lowered the export forecast for soft wheat this season to 28,5 million tons. The export forecast for hard durum wheat is 919.000 tons.
EU exports more than last year
Despite the reductions, the European Commission still expects EU wheat exports to be higher than last season. Ultimately, 25,4 million tons of soft wheat and 842.000 tons of durum wheat were exported from the 2024 harvest.
The weekly figures show that soft wheat exports have indeed gained a year-over-year lead, but the difference remains limited to around 1,5 million tons. Some adjustments are still needed to boost exports to the level projected for this year. Exports of hard durum wheat are even lagging behind last year's pace, according to preliminary figures.
The sharp rise in oil prices due to tensions in the Middle East is expected to further increase wheat prices. So far, the effect has been relatively limited, while diesel, gas, and fertilizer prices are reacting much more strongly to events in and around Iran.
On the Paris futures market, the March wheat price climbed to €197,25 per tonne. However, trading in wheat for this delivery month has almost come to a halt. Business is primarily conducted in May. That contract is now trading above €200 per tonne, and the same applies to the futures that follow. Delivery for May 2027 will rise to €200 per tonne.
The dollar effect is actually putting some pressure on prices in Chicago. March contracts fell 2,25 cents on the CBoT to $5,72¼ per bushel. Just as in Paris, there's hardly any trading left in March contracts; it's practically over, and traders are now looking ahead to May. That month is trading 3,25 cents lower at $5,74 per bushel.
The price for the delivery month of September is just under $6 per bushel, which puts the 2027 harvest in Chicago slightly higher at $6,37¾ per bushel. Based on current exchange rates, that price equates to just over €200 per tonne. September 2026 remains well below that at the equivalent of €189 per tonne.
Global unrest is also causing prices to rise on local markets, although this effect remains minimal for now. The Groningen grain exchange is raising its wheat price this week by €1 to €190 per tonne. Barley is currently performing slightly better than wheat. While the price increase is the same, the price is just one notch higher at €192 per tonne.