Euronext wheat futures demonstrated an upward trend, influenced by multiple factors such as the euro’s decline, apprehensions regarding potential conflict escalation, and adverse crop weather conditions. The May milling wheat on Euronext rose by 0.9% to reach 202.75 euros per metric ton, supported by the euro’s new five-month low against the dollar, which helped maintain Euronext above the crucial 200 euro chart floor.
Despite a recent easing in grain markets following U.S. government crop forecasts indicating ample U.S. and world supplies, the market witnessed short-covering activities driven by concerns over weather and geopolitical risks, particularly in light of potential retaliatory actions from Iran and repeated attacks on Ukrainian energy infrastructure. These factors, coupled with the strength in crude oil, contributed to the overall positive momentum in commodities.
Furthermore, ongoing flows of Russian and Ukrainian grain, despite the prevailing conflict, have tempered worries about potential disruption to Black Sea trade. Notably, Ukrainian 11.5% protein milling wheat was offered for sale for May shipment from Ukrainian seaports, while Russian wheat prices remained stable, reflecting the market’s resilience amidst geopolitical uncertainties.
The upcoming week will be crucial, with traders closely monitoring the return of Middle Eastern and North African importers to the market following the end of the Islamic month of Ramadan. Additionally, concerns over crop conditions in the EU and dry weather in Russia’s key southern export zone have contributed to a mixed outlook for this year’s European harvest, reflecting the complex dynamics at play in the global wheat market.
The combination of geopolitical tensions, adverse weather conditions, and the evolving landscape of global trade flows has underscored the nuanced and multifaceted nature of factors influencing the wheat futures market.