The wheat market has entered a volatile phase, with prices clawing back from recent lows only to face renewed pressure as the week unfolds. Early short-covering activity provided respite on both the Euronext and CBOT exchanges, but the underlying currents point to mixed and fragile fundamentals. Geopolitical instability, particularly the escalation risk following Ukraine's strike against the Russian air force in the Black Sea region, has injected a significant risk premium into the market. This has been partially offset by a firmer Euro and improved weather conditions across key European growing regions, capping price rallies.

In the US, winter wheat crops benefited from timely rainfall, with the USDA's Crop Progress report showing a surprising improvement in crop ratings, contrary to analyst expectations. While the sowing of spring wheat remains on track, the overall outlook is less optimistic than last year, tempering bullish sentiment. On the global stage, export dynamics are shifting: Australia projects a notable 10% drop in production, yet volumes remain above ten-year averages. Russian export activity remains sluggish due to low prices, regulatory nuances, and reservoir effects from a weak harvest, signalling a structural tightening of ending stocks to the lowest in five years. Export logistics and demand from key Asian buyers remain resilient for US wheat, keeping a floor under the market despite an otherwise cautious tone.

This confluence of supportive and bearish drivers—overlaid with weather-driven yield risks and evolving macroeconomic factors—makes near-term direction particularly sensitive to new information. Traders and analysts should maintain flexibility as the market narrative pivots rapidly between geopolitical, agronomic, and economic influences.

📈 Prices

Spot/FOB Market Prices

🌍 Supply & Demand

• US Crops: USDA reports 52% of winter wheat rated good/excellent (up from 50% week-over-week, and 49% LY). Spring wheat 50% good/excellent—still well below last year’s 74%.
• Australia: ABARES expects a 10% production drop to 30.6 Mmt, but volumes remain above the long-term average.
• Russia: SovEcon projects June exports at just 1.9 Mmt (vs. 4.0 Mmt year ago; May 2.4 Mmt). Weaker crop and unattractive export economics point to the lowest ending stocks in five years.
• Export Demand: US wheat export inspections at 552,910 t (down 2% w/w but up 29% y/y). YTD wheat shipments up 17% y/y with Asian buyers (Korea, Philippines, Indonesia) most active.

📊 Fundamentals & Market Drivers

• Short-covering and geo-risk renewed volatility as the Ukraine conflict escalates in the Black Sea.
• Firmer Euro and better weather in Western Europe temper bullish momentum on Euronext.
• US crop ratings improved unexpectedly—USDA winter wheat now 52% good/excellent.
• Spring wheat planting is nearly complete at 95%, but quality scores trail last year by far.
• Australian crop decline in focus, yet supply remains above the decade average.
• Persistently low Russian export offers, extended quotas, and weak on-farm selling reduce supply availability.
• Robust US export demand, especially from Asia, but global competition remains fierce.

🌦️ Weather Outlook

• US Plains & Midwest: Recent rains have improved yield potential for winter wheat, but continued scattered showers could increase disease risk locally.
• Black Sea (Ukraine/Russia): Wetter-than-normal conditions reported; escalating conflict could disrupt harvest logistics and export flows.
• EU (France/Germany): More favourable weather reducing drought stress; outlook calls for near-normal to slightly above-average temperatures, supporting healthy fill.
• Australia: Key regions expect drier, cooler weather in coming weeks; yield risks slightly elevated but not extreme.

📆 Trading Outlook & Recommendations

• Bulls: Monitor the escalation of the Black Sea conflict and possible harvest logistics issues. Upside risk if Russian end-stocks dwindle faster or weather turns unfavourable in major exporters.
• Bears: Improved US/EU crop ratings and weak Russian export interest temper upside. Favourable weather and soft demand in summer could limit rallies.
• Industry: Seek cover on dips, watch logistics risk from Ukraine. Pay attention to feed usage demand and possible feed wheat/barley substitution.
• Speculators: Consider flexible strategies—volatility is likely to remain high in the short term as the narrative switches between geopolitical and crop/weather concerns.

📅 3-Day Regional Price Forecast