Heatwave fears lift European grain prices, even as Chicago struggles
• Record European temperatures revive crop concerns
• Corn, rapeseed and wheat futures trade higher in Paris
• Contrast to Chicago, where grains slip on improved US weather
• US attack on Iran lifts Brent crude close to $100/Bbl
European wheat prices outperformed, as the focus of market weather concerns, which has been aimed at the US Plains, shifted across the Atlantic onto the potential impact of a heatwave.
Record temperatures for May were reported for many parts of western Europe, including the UK, parts of Spain and France, the EU’s top grain producer, where the government linked seven deaths “directly or indirectly to the heat”, including five by drowning.
National weather agency Météo France said that the 37.1 degrees Celsius reported near Hossegor in south western France was the “hottest day measured for the month of May since records began”.
In the UK, the Met Office reported Monday as the country’s hottest May day on record, while in Spain state weather office Aemet said that temperatures could reach 40 Celsius in the Guadiana, Guadalquivir and Ebro valleys.
The heatwave, which is expected to extend through this week (chart below), revived concerns for crops which in countries such as France had shown signs of drought stress before rains earlier this month.
Paris September-26 milling wheat futures added 0.9% in late deals.
In London, November-26 feed wheat futures edged 0.1% higher, backed also by softness in sterling, weighed by political instability given the potential for a challenge to Sir Keir Starmer as UK prime minister.
By contrast, Chicago soft red winter wheat futures for July-26 shed 1.6% in late morning deals, falling back below their 20-day moving average, weighed in part by concerns over the extent of demand loss to the recent rally, as well as to some weather improvements.
US wheat exports last week, at 368Kt, improved from the week before, but came in towards the lower end of the range of market expectations of 300-500Kt.
Meanwhile, weather maps showed a wet week ahead through much of the dry US Plains region, a major winter wheat-growing area, albeit that the moisture will come too late for many crops, and may even represent a setback in some areas. Winter wheat harvesting has begun in Texas, Oklahoma and Kansas.
Corn futures eased in Chicago too, shedding 1.4% for July-26, amid hopes for drier and warmer weather in the Midwest, favouring planting progress and crop establishment, although some sources cautioned of forecasts of a weather “blocking pattern” that could trap unusual heat through the Midwest, northern Plains and Canadian Prairies for some weeks.
Soybean futures for July-26 dipped by 0.8%, despite some firmness in soyoil, which for July-26 added 0.3% in Chicago, supported by firmer crude oil.
Brent crude stood up 4.0% in late deals, trading just below the $100/Bbl mark, after fresh US strikes on Iran were viewed as undermining prospects for a peace deal between the two countries, and a reopening of the Strait of Hormuz.
In Paris, rapeseed futures for August-26 gained 1.8%, buoyed by EU heatwave concerns as well as firmer crude oil, a key influence on crops used for making biofuel.
Corn futures also outperformed in Paris, thanks to weather fears, settling up 0.6% for August-26.
For more detailed grain market analysis, see CRM Agri’s Weekly Grains Outlook, as published earlier on Tuesday.
