EU Wheat Prices Surge on Saudi Demand and Black Sea Tensions

EU wheat prices climbed on Monday, reaching their highest level in three weeks. The rise was driven by a weaker euro, ongoing disruptions in Black Sea shipping due to the war, and a substantial purchase by Saudi Arabia. December milling wheat on Euronext ended the day up 1.6% at €245.50 per metric ton, marking the third consecutive session of gains.

The contract peaked at €246.25, a level not seen since September 10, with technical factors also contributing to the upward momentum. Chicago wheat prices also rose, and the euro's decline to 17-month lows against the dollar made European grain more affordable for overseas buyers. A futures broker noted that the combination of rising Chicago prices and a weaker euro provided strong support for Euronext wheat.

Tensions in the Black Sea were highlighted by reports of a cargo ship sinking, which Ukraine attributed to Russian drones. This incident underscored the ongoing risks in the region. Saudi Arabia's purchase of 683,000 tons of wheat added significant new demand, although traders suggested that French wheat might only capture a small portion of this volume due to high prices.

The Saudi purchase allows sellers to choose the origin of the wheat, which could lead to a portion being sourced from the EU, particularly Romania. However, traders noted that the disruption to Russian and Ukrainian exports due to the war could make EU supplies more attractive. Overall, the market remains cautious about the outlook for French wheat exports, despite the weaker euro providing some support.