EU Wheat Climbs on Saudi Demand and Black Sea Tensions

EU wheat prices climbed on Monday, hitting three-week highs as a combination of a weak euro, ongoing Black Sea shipping disruptions, and a massive Saudi Arabian purchase bolstered demand. The benchmark December milling wheat contract on Euronext closed the daytime session at €245.50 per metric ton, up 1.6%, marking its third consecutive day of gains. The contract briefly reached €246.25, its highest level since September 10, with technical support from a chart gap at the open. Chicago wheat also saw gains, contributing to the upward trend.

The euro's slide to 17-month lows against the dollar made European grain more affordable for overseas buyers, though traders questioned whether the weakened currency alone could offset rising prices. A futures broker noted that negotiations over Black Sea shipping were stalling, driving more buyers to the market. Reports of a cargo ship sinking in the Black Sea, which Ukraine attributed to Russian drones, further highlighted the risks in the region.

Saudi Arabia's purchase of 683,000 tons of wheat introduced significant new demand, though traders suggested that French wheat might only capture a small portion of this volume. The Saudi purchase allows sellers to choose the origin, meaning EU supplies, particularly from Romania, could play a key role in filling the order. One German trader pointed out that the disruption to Russian and Ukrainian exports, due to the ongoing war, could lead to a larger share of the Saudi purchase being sourced from the EU.

While the Saudi purchase is expected to reduce available export supplies, traders remain cautious about the overall picture of French exports, describing it as tepid. The broker questioned whether buyers would be willing to pay €246 for French wheat, despite the euro's weakened position.