Wheat price difference between Chicago and Paris widens

Photo: Canva
Photo: Canva

In early March, the wheat price on the futures market in Chicago soared far above the price level in Paris. After that, the market recovered and Chicago fell again to just below the prices of the Paris market.

However, in the last 2 weeks we have seen that the difference between the 2 trading markets is increasing. Last week, this difference was exacerbated by slightly rising prices in Paris and falling prices in Chicago. At the end of last week, the price difference rose to €45 per tonne. In Paris the wheat price climbed to €407 per tonne, in Chicago the trade fell to €362 per tonne.

Developments in Ukraine impacting markets

Trading on the Matif futures market in Paris is guided by developments in Ukraine. The statement by a Russian general that Russia is out to conquer the entire south of Ukraine was grist to the mill of speculators aiming for higher prices.

On the one hand, because this fuels the fear that the war will last a long time. In addition, this also means that Ukraine would lose its connection to the Black Sea if Russia takes over the entire southern strip. That makes it a lot more difficult for Ukraine to export the grain.

US & EU wheat export lags behind

Trade on the futures market CBoT in Chicago was mainly driven last week by disappointing exports of wheat from the United States. Although the worldwide sale of wheat is severely hampered by the war in Ukraine, the Americans are unable to take advantage of it. Just like the European Union. Wheat exports from both the US and the EU are lagging behind last year. The expectation was that these suppliers would benefit from stagnating exports from the Black Sea region. For the time being, there are no signs of this and that has a downward effect on prices in Chicago.

It is striking that the new harvest in Chicago is not inferior to Paris. Wheat delivered in December is trading just above €360 per tonne on both trading points.