The European wheat market is falling under pressure from the temporary peace agreement, lower energy prices, and rising export competition. At the same time, yield expectations are rising in Russia and France. Read more about the decline in wheat prices on the futures market.
"Ceasefire, start sailing!", headlines Rabobank on Wednesday, April 8, above its daily report on the economy and the markets. It is immediately stated, however, that this is unfortunately not that simple. Nevertheless, the energy and grain markets are already anticipating a recovery in trade, and the war premium is disappearing from the markets.
Late this morning, the May price for wheat on the Paris futures market drops to €198,50 per ton. This represents a price drop of €4 compared to Tuesday. This marks the end of a period of several weeks since early March during which wheat prices on the futures market were above €200 per ton.
For new crop and later terms, prices in Paris are still above €200 per ton. Despite a drop of €4,50 in the morning hours, September is still trading at €207,25 per ton around midday. September 2027 shows a similar price decline, falling to just under €220 per ton.
In Chicago, wheat prices rose slightly on Tuesday, despite weather forecasts indicating precipitation in areas where wheat is suffering from drought. The May contract for soft red wheat traded 2 cents higher at $5,98 per bushel. Prices above $6 per bushel, as seen in late March, thus remain out of sight. The temporary peace agreement is pushing prices down further.
Falling dollar leads to more competition
Moreover, a falling dollar means more competition for European wheat. Today, the euro is rising towards $1,17. This marks a temporary departure from a value just under $1,15. This makes selling EU wheat more difficult.
Sentiment is further influenced by the good condition of the wheat in France. The grain crop is in slightly better shape than last year. Moreover, Argus Media is raising its estimate for the Russian harvest by 2,2 million tonnes to 88,7 million tonnes. This also supports price pressure on the EU market.
Tomorrow evening, the US Department of Agriculture will release a new monthly update on global wheat forecasts. Although trade has already anticipated this somewhat in recent days, this will likely have less impact than the talks between the United States and Iran and the reopening of the Strait of Hormuz.