European wheat futures have extended their gains, marking an annual increase driven by robust U.S. grain performance and concerns regarding tightening wheat supplies from Russia.
Key Highlights:
Current Market Performance:
Benchmark March milling wheat on the Paris-based Euronext settled 1.3% higher at 237.25 euros ($246.41) per metric ton after a shortened trading session ahead of the New Year closure.
The contract briefly reached 237.50 euros, a six-month high, as it breached technical resistance around 235 euros, attracting buying interest in light holiday trading volumes.
Annual Gains:
Over the year, front-month prices increased by 6.6%, recovering from losses experienced last year when prices fell from record levels in 2022 due to the ongoing conflict following Russia’s invasion of Ukraine.
Market Dynamics:
Euronext wheat prices touched a four-year low in 2024 due to ample global supply and robust Black Sea exports, which alleviated concerns about the war’s impact on grain availability.
However, issues such as poor early growth for the upcoming winter wheat crop in Russia, rising local prices, and government measures to limit exports have provided support to the European market.
Influence of U.S. Grains:
Euronext has also benefited from a year-end rally in Chicago, where corn reached a six-month peak and wheat hit a two-week high, driven by adverse weather conditions in Argentina and steady U.S. exports.
Export Competition:
Despite these gains, export competition remains a challenge for Euronext. Poor harvests in France and Germany have reduced availability in Western Europe, but supplies from the Black Sea region continue to dominate the market.
Traders noted that harvests in Argentina, Brazil, and Australia are contributing to increased overseas competition.
Wheat Export Loading:
France’s wheat export loading program has been limited, according to port data compiled by LSEG.
Oilseed Market Performance:
In the oilseeds sector, front-month rapeseed on Euronext posted an annual rise of 16.7%, buoyed by strength in related vegetable oil markets, such as palm oil.
However, rapeseed prices have declined since mid-December, hitting a four-week low of 505 euros per ton before settling at 511.25 euros, down 0.2% for the day.