European wheat futures experienced an increase on Wednesday, supported by a significant decline in the euro against the dollar and renewed apprehensions regarding Black Sea supply.
The May milling wheat on Paris-based Euronext settled 1.7% higher at 204.50 euros ($219.69) per metric ton. The weakening euro against the surging dollar following higher than expected U.S. inflation has cooled expectations for interest rate cuts. This decline in the euro’s value makes European grain more affordable in dollar-priced export markets.
Traders have expressed concerns about the conflict in Ukraine and dry weather risks to Black Sea crops, which have provided support to Chicago wheat and contributed to its stability despite the impact of the dollar. There is particular unease about Russian crop weather, amplified by a relatively quiet news environment leading up to the USDA reports on Thursday.
Additionally, market participants are closely monitoring the U.S. Department of Agriculture (USDA) world supply and demand report. In Europe, traders are observing drier weather in France to assess the potential for maize planting to commence. In Germany, wet weather has not raised significant concerns, with waterlogged conditions being less widespread than in France and Britain.
Furthermore, financial investors reduced their net short position in Euronext wheat last week, according to data published by Euronext on Wednesday.