European Wheat Futures Fall on Profit-Taking After July Rally

European wheat futures retreated on Friday as traders booked profits following a substantial rally in July that was fueled by escalating supply concerns in the Black Sea region. The decline mirrored a similar move in U.S. wheat markets, signaling a temporary pause in the recent upward price trend.

Market Action

The September milling wheat contract on the Paris-based Euronext exchange fell 2.9% to close at €222.75 ($256.54) per metric ton, according to exchange data. The contract experienced a sharp downturn during afternoon trading, tracking losses in the benchmark Chicago wheat futures contract.

Despite Friday's decline, the contract remains significantly elevated after gaining more than 10% in July. Prices stood at €202.0 per ton at the end of June, highlighting the recent bullish sentiment driven by geopolitical risk.

Geopolitical and Currency Headwinds

The recent price surge was largely driven by disruptions to cargo movements in the Black Sea. Recent attacks by Russia and Ukraine targeting grain infrastructure and vessels have heightened risks for global importers, particularly those in the Middle East, Africa, and Asia, lending support to global grain prices.

A stronger euro also weighed on market sentiment, according to market participants. A more valuable currency can make the European Union's exports less competitive on the global market as the bloc seeks to fill supply gaps left by Black Sea disruptions.

Ad

EU Supply Outlook Tightens

Underlying the daily market movements, the fundamental supply outlook for the European Union is tightening. On Thursday, the European Commission reduced its production forecasts for the 2026/27 season for both grains and oilseeds.

Key details from the forecast include:

• A projected 8% decrease in the EU's wheat output.
• Final wheat stocks are now forecast to tighten to 12.9 million tons.

This revised stocks figure is a notable decrease from the 13.8 million tons forecast last month and the 16.5 million tons estimated at the end of June this year, suggesting a more constrained supply backdrop.