Wheat Prices Climb Amid Geopolitical Tensions and Strong Global Demand

Market Report: Wheat

The wheat futures market continued to show strength on Wednesday, with prices reaching a two-week high amid geopolitical tensions and robust demand from Morocco.

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Price Developments

• Euronext (March Futures):
  • Gained 0.75 EUR to close at 227.25 EUR/t, marking the third consecutive day of increases.
• CBOT (December Futures):
  • Rose 2.5 ct to 549.75 ct/bu (≈ 202 EUR/t).

Geopolitical tensions and demand-supported prices:

• Ukrainian strikes on Russian targets using U.S. missiles fueled a risk premium in wheat markets.
• Moroccan wheat purchases added further bullish sentiment, with nearly 1 million t bought for short-term delivery since late October. Approximately one-third of these shipments may originate from France.

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EU Wheat Exports

The EU wheat export pace lags behind the previous season:

• Soft Wheat Exports (Season-to-date, as of November 17):
  • Total exports: 8.79 million t (compared to 12.66 million t last year).
  • Top Exporters:
    • Romania: 2.525 million t.
    • Lithuania: 1.193 million t.
    • Latvia: 1.33 million t.
    • France: 917,000 t (up 17,000 t week-over-week).
    • Germany: 890,000 t (up 120,000 t week-over-week).
  • Imports: 3.518 million t (on par with last year).
    • Ukraine supplied 2.469 million t, accounting for nearly two-thirds of imports.

Note: The European Commission indicated incomplete export data for Italy, France, Bulgaria, and Ireland.

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Ukraine and U.S. Production Outlook

• Ukraine:
  • The Ministry of Agriculture forecasts a 2025 wheat harvest of 25 million t, up from 22 million t in 2024.
  • The increase is attributed to a larger projected planting area.
• United States:
  • Improved crop conditions limited price gains in Kansas and Chicago:
    • USDA Crop Progress Report (as of late Monday):
      • 49% of winter wheat rated as good to excellent (up from 44% the previous week).
      • This is the best rating for this period in five years.
    • Rainfall has supported plant growth, boosting harvest prospects for 2025.

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Currency Impact

• On Tuesday, the euro showed a slight recovery against the U.S. dollar, although it remains near a one-year low.
• A weaker euro generally supports EU exports by making them more competitive globally.

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Conclusion

Wheat prices remain supported by:

1. Geopolitical Risks: Heightened tensions between Ukraine and Russia add a risk premium to the market.
2. Strong Demand: Morocco’s large-scale purchases underline ongoing demand for wheat.
3. Improving Crop Conditions: While limiting gains in the U.S., favourable conditions signal strong 2025 harvest prospects.

Despite near-term price support, improved harvest expectations in Ukraine and the U.S. could temper bullish momentum in the medium term.