European grain markets began 2026 with a significant decline in wheat prices, impacted by weak liquidity and limited trading volumes coinciding with the holiday season and New Year celebrations. This subdued atmosphere affected investor activity, as many major players were absent from the market, making price movements more sensitive to even minor changes in supply and demand.
At the close of the first session of the year, benchmark milling wheat contracts for March delivery on the Euronext exchange, based in the French capital Paris, recorded a decrease of 0.4%, settling at a level of 189.00 euros (equivalent to $221.73) per ton, a level that reflects the state of anticipation and caution that prevails among traders in global markets.
Dominance of global supply abundance
Wheat futures are under continued selling pressure, primarily due to a global oversupply of the grain. Market data suggests that abundant harvests in key production areas worldwide have eased concerns about food security, pushing prices down. Markets have notably disregarded any potential support that might have resulted from the ongoing military escalation in the Russia-Ukraine conflict, demonstrating a greater resilience to geopolitical crises than in previous years.
The geopolitical context and its limited impact
Despite the Russian-Ukrainian war entering its fourth year, its direct impact on wheat prices has begun to gradually diminish in favor of market fundamentals (supply and demand). These developments come as Moscow and Kyiv exchanged accusations of launching attacks targeting civilians on New Year's Day, reflecting the continued tensions on the ground.
Meanwhile, international attention is focused on the intensive diplomatic efforts led by US President Donald Trump, aimed at ending this protracted conflict. However, the lack of tangible progress in peace talks so far has maintained a state of uncertainty. Despite this, ample global inventories have made the market less reactive to these political developments, with traders currently prioritizing actual shipment flows over potential risks.
Expected economic impacts
This decline in European wheat prices carries significant economic implications, both regionally and internationally. For wheat-importing countries, particularly in the Middle East and North Africa, the price drop is welcome news that could help reduce import bills and alleviate inflationary pressures on food prices. Conversely, this decline places additional pressure on European farmers, who are already facing challenges related to rising production costs and declining sales revenues.
