Europe's grain prices surge on heatwave
- Weather-driven gains in European grain prices
- French crop conditions remain stable
- EU MARS yield outlook and regional risks
- Grain market shifts from geopolitical risk to weather risk
European grain prices jumped higher to start the week as extreme heat hits Europe and the Black Sea, with little sign of relief for the next 10-days.
The recent sell off in European grain prices following easing tensions between the US and Iran has opened the door for risk premium being added should crop conditions continue to deteriorate, the main focus is centred around spring crops.
FranceAgriMer’s latest crop condition report on Friday report showed only a modest deterioration in French crop conditions, although ratings remain broadly favourable for most winter cereals:
Soft wheat was rated 76% good or very good, down one point on the week but still above 68% at the same stage last season.
Winter barley ratings fell two points to 73% good or very good, while harvest progress reached 4%, slightly ahead of both last year and the five-year average.
Spring barley also slipped one point to 67%, now in line with last year, while durum wheat was unchanged at 64% but remains below last season’s level.
Overall, the data suggest French crops remain in reasonable condition, but recent heat and dryness are beginning to weigh on ratings, particularly for spring crops and durum wheat.
For Europe more widely, the EU MARS bulletin was released today, which kept the EU yield outlook broadly fair: winter crops are near maturity and summer crops are developing well in most regions, with EU yields seen just above the five-year average but below last year.
However, MARS warned that spring dryness and May heat have reduced winter-crop potential in parts of western, central and eastern Europe, with central-western France, south-west Germany/eastern France, Hungary, western Romania and Ukraine highlighted as concern areas.
Chicago markets opened after a long weekend for the Emancipation Day holiday, prices drifted lower, following weaker export inspection for corn and soybeans, although wheat exports remains strong at 393Kt from 255Kt in the previous year.
UK Prime Minister Keir Starmer announced his resignation, the pound strengthened following the announcement.
Crude oil prices have dipped below $75 a barrel for the first time since March with both US and Iranian delegates reporting positive progress in the peace talks going on in Switzerland uncertainty remains over the Strait of Hormuz with Iran announcing its closure following attacks in Lebanon over the weekend.
