Euronext Wheat: A Convergence of Fundamental and Geopolitical Bullish Catalysts

The Euronext wheat futures market is at a pivotal juncture, where a unique alignment of fundamental, geopolitical, and technical factors is creating a compelling case for a near-term rally. With the USDA's July 2025 World Agricultural Supply and Demand Estimates (WASDE) report signaling tighter U.S. wheat supplies, Algeria's robust import demand shifting toward Black Sea origins, and technical indicators hinting at a potential breakout, the stage is set for strategic entry into Euronext futures.

Fundamental Drivers: Scarcity and Demand Dynamics

The USDA's July 2025 WASDE report revealed a 3% reduction in U.S. winter wheat production to 1.35 billion bushels, with spring wheat down 7% year-on-year. U.S. wheat ending stocks for 2025-26 were projected at 890 million bushels—8 million lower than June's estimate. These adjustments reflect a tightening global supply backdrop, particularly in the U.S., which historically serves as a key exporter. Meanwhile, global wheat ending stocks are at multi-year lows, amplifying the sensitivity of prices to incremental demand shifts.

Algeria, the world's fourth-largest wheat importer, has emerged as a critical player. The North African nation is projected to import 9.2 million tonnes of wheat in the 2025-26 marketing year, driven by stable domestic production (3 million tonnes) and a per capita consumption of 110 kg annually. However, geopolitical tensions between Algeria and France have redirected procurement to the Black Sea region. Algeria's recent tenders excluded French wheat, favoring Ukrainian and Romanian suppliers. While this reduces direct demand for Euronext wheat, the broader market benefits from the surge in global wheat prices driven by Black Sea exports.

Geopolitical Shifts: Black Sea Dominance and European Vulnerability

The Black Sea region has solidified its dominance in global wheat trade, with Russia and Ukraine accounting for over 1.3 million tonnes of Algeria's wheat imports in the first half of 2025. Ukraine's exports to Algeria have nearly tripled year-on-year, while Russia's logistical advantages and competitive pricing have further entrenched its market share. This shift has left European wheat producers, particularly France, at a disadvantage. French wheat exports to Algeria have plummeted by 70% since July 2024, a direct consequence of diplomatic tensions over Western Sahara.

For Euronext wheat, this dynamic creates a paradox: while direct Algerian demand for European wheat is constrained, the broader market is buoyed by the Black Sea's price-driven exports. The resulting global wheat price inflation indirectly supports Euronext futures, as European producers compete to retain market share in other regions.

Technical Analysis: A Rectangle Formation and Breakout Potential

The technical landscape for Euronext wheat futures (WEATP) is equally compelling. The price is currently trading within a well-defined rectangle formation, bounded by support at 499 and resistance at 592. A breakout above 592 would signal a new bullish trend, while a breakdown below 499 would confirm a bearish shift.

Key support and resistance levels for Q2 2025 include:
- Immediate support: 530
- Immediate resistance: 604
- Medium-term support: 499
- Medium-term resistance: 592

Oscillators like the RSI and MACD suggest a bearish bias, with the RSI hovering near oversold territory (20-40) and the MACD showing negative divergence. However, the 9-day ADX at 36.53 indicates a moderate trending market, suggesting that a breakout could trigger a sharp move.

Actionable Entry Points and Risk Management

Given the convergence of fundamentals and technicals, strategic entry points for Euronext wheat futures include:
1. Long Position at 530: A breakout above this level would validate the rectangle's bullish potential. A stop-loss below 530 would limit downside risk.
2. Short-Term Rally at 604: A test of resistance could trigger a pullback, offering a high-probability entry for short-term traders.

Risk management is critical. Traders should cap losses at 5% of position size and consider trailing stops as the price approaches key resistance levels. Additionally, monitoring geopolitical developments—such as potential normalization of French-Algerian trade—can help mitigate sudden market shifts.

Conclusion: A Convergence of Forces

Euronext wheat futures are poised to benefit from a rare alignment of tightening U.S. supplies, robust Algerian demand, and Black Sea-driven price inflation. While technical indicators currently lean bearish, the fundamental undercurrents suggest a near-term rally is imminent. For investors, the key lies in balancing strategic entries with disciplined risk management, capitalizing on the market's sensitivity to both supply-side constraints and geopolitical shifts.

As the global wheat market navigates this complex landscape, Euronext wheat offers a unique opportunity to profit from the interplay of scarcity, demand, and diplomacy.