​Global Wheat Prices Surge as Markets React to Export Demand and Weather Threats

In the past week, global wheat markets have experienced a significant upward shift, driven by strong export activity, weather-related concerns, and fluctuating currency values. This movement in wheat prices has been observed across multiple global exchanges, reflecting a complex interplay of factors influencing the current market dynamics.

In the UK, the wheat market demonstrated some resilience towards the end of last week, recovering after hitting new contract lows earlier. By the close of trading, November 2024, London wheat had firmed up to £181.25, while May 2024 and November 2025 contracts closed at £193.55 and £191.80, respectively. However, this recovery was modest compared to gains seen in other markets, such as the French Matif, which rose by €7 (3.4%), and US Chicago wheat, which climbed by more than 4%.

The relatively weaker performance of the UK market can be partly attributed to the strength of the British pound against both the euro and the US dollar, as currency markets anticipate that interest rates will decrease more rapidly in the US and Europe than in the UK. Additionally, UK wheat prices remain high compared to other global sources, which may be dampening demand.

Physical trading within the UK has been slow, with prices generally falling short of growers' expectations. Nevertheless, milling premiums have remained strong, supported by the availability of imported wheat with higher protein levels, priced only slightly above domestic wheat. Among the 700 samples of Group 1 wheat tested, the average protein content was 12.44%, with 70% of the samples meeting or exceeding the 12.0% threshold. However, lower protein levels in biscuit wheat and the widespread presence of ergot are creating complications in the market. As of August 28th, 88% of the wheat area had been harvested, although recent wet weather has delayed harvests in the west of the UK and Northern Ireland.

Wheat futures saw notable gains on several major exchanges last week. Minneapolis Grain Exchange (MGEX) wheat futures rose by 33 cents, Chicago Board of Trade (CBOT) wheat increased by 31 cents, and Matif wheat in Europe saw an €11 rise. These increases were primarily driven by robust export activity, particularly for wheat and corn, and renewed interest from China in purchasing US soybeans. The market was further influenced by a mid-week heatwave that threatened the soybean crop, prompting traders to cover short positions ahead of the long weekend in the United States and Canada.

In Europe, wheat prices found additional support amid reports of declining crop yields in northern regions, compounded by a reluctance among farmers to sell at current price levels. Despite the euro weakening against the US dollar, theoretically making European wheat more competitive globally, demand for wheat from northern Europe remains muted.

The Russian wheat market also saw adjustments, with SovEcon lowering its forecast for the country's wheat crop to 82.5 million tonnes due to lower yields from spring wheat. Meanwhile, Ukrainian wheat exports have continued at a strong pace, with Romania and Bulgaria also actively shipping grain. However, demand from North Africa and the Middle East has been limited. Egypt is expected to return to the market soon, with most buyers aiming to secure supplies from November onwards. Brazil's wheat harvest in the southern hemisphere is progressing well, with approximately 10-15% already completed. Argentina's crop conditions have improved, pointing to a healthy 18 million tonne harvest, and Australia is on track for a strong production season.

In conclusion, The global wheat market has seen significant gains over the past week, driven by strong export demand, speculative buying, and concerns over weather impacts. In Europe, wheat prices have been supported by reports of reduced yields and a weakening euro, though demand remains subdued. In the UK, the market has lagged behind its global counterparts, with currency strength and high domestic prices contributing to this discrepancy. Despite these challenges, milling premiums remain strong, though protein content variability and ergot contamination complicate the market.