Euronext wheat futures saw little movement on Thursday, as the U.S. holiday lull, combined with a surprise development in Egypt’s wheat purchasing strategy, left traders uncertain about market direction. March wheat futures on the Paris-based Euronext exchange ended the day flat at 222.50 euros ($234.76) per metric ton, despite briefly dipping to a near two-week low of 221.50 euros earlier in the day.
As U.S. markets closed for Thanksgiving, trading activity in Europe was subdued, and participants turned their attention to the latest developments surrounding Egypt, one of the world’s largest wheat importers. The Egyptian wheat market was rocked by news that a newly formed agency, the Mostakbal Misr Agency for Sustainable Development, had launched an unexpected move to buy wheat—breaking with the country’s traditional procurement system led by the General Authority for Supply Commodities (GASC).
Euronext Wheat Prices Under Pressure
The European wheat market has faced downward pressure in recent days, as the rebound of the euro against the U.S. dollar (EUR/USD) and a dip in the Russian rouble (RUB) added to the headwinds. Additionally, international tenders have revealed increased competition from Black Sea suppliers, particularly from Russia and Ukraine, which continue to offer wheat at attractive prices.
“Euronext prices have been a bit sluggish this week,” said one trader. “The strength of the euro and the constant flow of Black Sea wheat at competitive prices have made it harder for European supplies to hold their ground.”
Traders are also keeping a close eye on the upcoming seasonal changes in the Black Sea region, as the end of the harvest season may lead to a slowdown in shipments. Despite this, Russian and Ukrainian wheat continues to dominate the international market at prices that remain under $230 per ton, FOB (Free on Board), which continues to weigh on the EU wheat market.
Egypt’s New Wheat Purchasing Agency: A Game Changer?
The surprise twist in Thursday’s market came from Egypt, where the Mostakbal Misr Agency for Sustainable Development made waves by announcing it was seeking direct purchase agreements for wheat and vegetable oils, bypassing the usual tender system that has long been managed by GASC.
The agency, established in 2022 by a presidential decree, appeared eager to jumpstart its operations, but the move was met with some confusion. Russian wheat exporters, among others, reported that they had not received official notification from Egypt regarding the new agency’s wheat purchase. As a result, traders remained cautious, unsure how the new agency would operate or whether it would have the necessary financial backing to honour contracts.
“Traders are a bit puzzled,” said one German trader. “There’s a lot of uncertainty because we don’t yet know what this agency’s full capabilities are, or whether they can guarantee payment. It may take some time to build trust.”
However, the need for wheat in Egypt remains undeniable. The country’s dependence on wheat imports for its large population is well-established, and despite the uncertainty, traders anticipate that once the new agency gains traction, Egypt will continue to seek wheat from international suppliers.
The Impact of Black Sea Wheat Prices
Meanwhile, low prices from the Black Sea continue to dominate global wheat markets. Russian wheat with a 12.5% protein content was offered at around $225-$227 per ton, FOB, while Ukrainian wheat with 11.5% protein content was slightly cheaper at $218-$219 per ton. Romania, another key supplier, was offering 11.5% wheat for December delivery at prices between $225 and $230 per ton FOB.
“Black Sea wheat is still the price leader,” one trader explained. “Even with the recent concerns about the upcoming export season from Russia, the prices are still very competitive for global buyers.”
Although there are expectations of a slowdown in Russian wheat exports, with the country possibly shipping 9 million tonnes less between December and June compared to the previous year, traders are not overly concerned. North American and Southern Hemisphere supplies are expected to fill the gap left by Russia’s potential export cuts.
Looking Ahead: Can Egypt’s New Agency Shake Up the Wheat Market?
The wheat market remains in a delicate balance, with competition from the Black Sea continuing to set the pace. However, Egypt’s introduction of the Mostakbal Misr Agency could potentially change the dynamics of wheat procurement for the country. If the agency succeeds in establishing itself and gains the trust of international traders, it could become a more regular player in global wheat markets.
“Once confidence is established, we expect to see more trades with the new agency,” said the German trader. “But until then, there will likely be some volatility and uncertainty as traders wait for further clarity on how it operates.”
For now, the EU wheat market remains on hold, waiting for confirmation on Egypt’s future buying strategies and any potential shifts in Black Sea export flows. With U.S. markets closed and limited new data, traders are left to mull over the impact of these developments while keeping an eye on the bigger picture of global wheat supply and demand.
