EU Wheat Prices Stabilize Amid Export Optimism, But Challenges Linger

The European Union’s wheat market has entered a period of cautious optimism as prices stabilize near €220 per metric ton in May 2025, driven by robust production forecasts and a surge in exports. However, geopolitical tensions, logistical hurdles, and weather risks continue to cast shadows over the outlook. For investors, the interplay of these factors presents both opportunities and pitfalls in this critical agricultural sector.

Price Stability Amid Global Uncertainty

EU wheat prices have hovered around €220 per metric ton since early 2025, a level that reflects a balance between supply and demand. The stabilization follows a volatile period marked by geopolitical shifts and weather-related concerns. For instance, Euronext’s May milling wheat futures settled at €220.25 in late April, after briefly dipping to €219.75—the lowest since March—due to a U.S.-brokered Black Sea shipping agreement that eased fears of supply disruptions (see ). This agreement allowed Russian and Ukrainian exports to flow more freely, intensifying competition with EU wheat. However, traders remain divided on whether this will sustainably depress EU prices or merely delay a potential rebound tied to strong global demand.

The Export Surge: Romania Leads, But Risks Linger

The EU’s export momentum is anchored by Romania, which exported over 7.1 million metric tons of grain (including 4.7 million tons of wheat) to non-EU markets from July 2024 to April 2025—a period overlapping with Q2 2025. This activity has been fueled by record EU production, with Strategie Grains forecasting a 128.1 million-ton harvest for 2025/26, up 13% year-on-year. Romania’s dominance, however, faces political headwinds: proposals to restrict Ukrainian grain exports via its Black Sea ports threaten to disrupt regional trade flows and could reduce EU-wide export volumes if enacted.

Other EU producers, such as France (projected to harvest 33.9 million tons in 2025) and Bulgaria (6.9 million tons), also contribute to export growth. Yet, logistical bottlenecks persist. Rising VLSFO fuel costs in Black Sea ports have reduced spot market activity by 30–50% versus 2023 levels, raising transportation expenses and complicating export competitiveness (see ).

Risks on the Horizon

1. Geopolitical Volatility: While the Black Sea agreement eased near-term risks, Russia’s invasion of Ukraine continues to distort regional logistics. Any escalation could reignite supply chain disruptions, benefiting EU exporters as an alternative to Russian wheat.
2. Weather Uncertainty: Drought conditions in France and Germany—responsible for 60% of EU wheat production—threaten yields. April rainfall is critical; insufficient moisture could reduce output and tighten global supplies, lifting prices.
3. Currency Fluctuations: A stronger euro erodes EU wheat’s price advantage over Russian and U.S. competitors. Conversely, a weaker pound has inflated UK wheat prices to £173.55 per ton for May contracts, highlighting regional disparities.

Investment Implications

• Short-Term Plays: Investors eyeing EU wheat should monitor Algerian tender activity and weather forecasts. A robust Algerian procurement cycle or drought-driven yield cuts could push prices above €225 by Q3.
• Long-Term Trends: The EU’s record production and Africa/Middle East demand provide a bullish undercurrent. However, oversupply risks loom if global inventories swell past 806 million tons (as projected by the International Grains Council).

Conclusion

The EU wheat market in May 2025 sits at a crossroads. Prices are stabilized by strong production and export demand, with Romania leading the charge. Yet, risks—from geopolitical shifts to weather patterns—could upend this balance. Investors must weigh the 13% year-on-year production gain and record harvest projections against the 30–50% drop in Black Sea shipping activity and EU’s vulnerability to currency swings.

While the immediate outlook suggests prices will hold near €220, the longer-term trajectory hinges on two factors: whether EU producers can maintain export competitiveness against lower-priced Russian wheat and whether weather conditions in key growing regions avoid catastrophic yield losses. For now, the market remains a precarious equilibrium of hope and uncertainty.