European wheat prices dropped on Thursday, returning to contract lows as rain forecasts for Black Sea crops increased the prospect of more export competition. Dealers waited for planned U.S. China trade talks.

The benchmark September milling grain price on Paris’ Euronext fell 0.8% to 202.50 euro ($227.41). The contract price had fallen to 202.00 euro on Monday. This was the lowest second-month price recorded since March 2024.

The Chicago wheat futures fell by 1.2% in the early hours of Thursday, affecting Euronext’s prices. Many dealers were away due to a French public holiday.

One German trader stated that “recent bearish momentum continues in Euronext, with a bad west EU export outlook but with limited actions today due to the French holiday.” The weather for most EU crops and the Black Sea is good, except in the north of EU and UK.

The lack of new wheat tenders has also contributed to the low import demand.

Another trader stated that “good volumes of rainfall are forecast in the coming days for South Russia and other Black Sea Regions including the Balkans Ukraine and Romania.”

This will help to reduce the fear of crop damage due to dryness and set up the Black Sea for a large export supply. Soon, we could see an increase in crop forecasts for Russia as well as the Balkans.

It appears that the Black Sea region will again dominate exports into the Middle East, Africa and Asia in the second half this year. This raises the question of whether Euronext will be able to maintain the 200 euro per ton mark, which is important psychologically for many on the market.

Dealers are waiting for the results of U.S. and China trade talks to be held in Switzerland this weekend. This could help cool down the trade war that has disrupted grain market.

The United States announced a deal with Britain, which raised hopes that the trade dispute could be de-escalated to prevent a disruption of the grain market. (Reporting and editing by Richard Chang, Ed Osmond, and Michael Hogan)

(source: Reuters)