Euronext wheat extended losses on Friday, following price moves in Chicago, after announcements tied to a U.S.-China summit prompted extensive selling across grain markets. Improved crop conditions in parts of Europe also helped ease earlier drought concerns and applied downward pressure on prices.
By 1549 GMT the September milling wheat contract on Euronext was trading at 209.50 euros per metric ton, down 1.9%. The decline marked a third consecutive session of losses and took the contract away from Wednesday's two-week peak of 218.00 euros.
During U.S. President Donald Trump's visit to China on Friday, U.S. Trade Representative Jamieson Greer said Washington expects "double-digit billions" in Chinese purchases of U.S. agricultural products over the next three years. Market participants responded to the announcement by selling into positions that had been built up earlier.
Traders expressed disappointment at the lack of precise details. Observers noted uncertainty about whether any new agricultural purchases would surpass Beijing's existing pledge to buy 25 million metric tons of U.S. soybeans annually. That ambiguity contributed to a risk-off stance among some investors in the grain complex.
The summit news triggered liquidation of sizable long positions held by investment funds. Those positions had been accumulated during the Iran war, and the announcement served as a catalyst for funds to reduce exposure across grain markets.
Price volatility earlier in the week had been driven by a surprise projection from the U.S. Department of Agriculture. On Tuesday the USDA forecast what it described as the smallest U.S. wheat crop since 1972, a development that had caught traders off guard and led to a sharp market rally. The subsequent summit statements and easing European crop concerns have since reversed part of that advance.
Market participants are now weighing the ambiguous trade commitments against fundamental supply signals. For the moment, the combination of fund de-risking and signs of improved moisture in Europe has been sufficient to push Euronext wheat lower for a third session.
Market implications
- A decline in Euronext wheat reflects synchronized selling across major grain futures benchmarks.
- Ambiguity in trade commitements and shifting fund positions have immediate effects on commodity liquidity and price direction.
- Improved crop conditions in Europe have reduced a key near-term weather-driven risk to supply.