Wheat futures are up almost 29% in 2018, in a market buoyed by a diminished crop outlook in the US, EU and Russia. Buyers have stepped up their purchases further in recent days with expectations that prices could climb even higher.
Analysts Agritel said there were serious concerns about crops “from the Atlantic to Urals” and although their analysis so far is focused on Europe and the Black Sea “this is enough to change the game”.
French consultancy ODA has lowered its estimate for 2018’s European soft wheat harvest by 205 million bushels, for a total production of 4.589 billion bushels. Reductions stem primarily from France, Germany, Sweden and Denmark.
Consultancy Strategie Grains has also cut its estimate for this year’s EU soft wheat crop, which is now expected to be below 130 million tonnes versus 132.4 million tonnes estimated in early July, it said on Wednesday.
This would be the lowest soft wheat harvest in the 28-member bloc since 2012, analyst Laurine Simon told Reuters.
In Russia, the world’s number one wheat exporter, yields are at a three-year low, according to agriculture consultancy SovEcon.
Ireland is seeing its poorest grain harvest since 1993. While German wheat production is down 15.1% from last year with the worst drought-hit areas still to be harvested.
And the list goes on and on and on…
Extreme weather conditions are being blamed for 2018’s patchwork harvest.
The historic heatwave and drought conditions in northern Europe this summer have seriously hampered yields. Quality as well as totals, as persistent heat causes the crops to grow too quickly.
US, EU and Russian farmers are now seeing the affects of the brutal spring frosts earlier in the year, as well as a general uptick in intense storm systems and the heavy rain, large hail and resulting flooding they bring.
With extremes in weather only to worsen during our descent into the Grand Solar Minimum, wheat prices are predicted to have doubled by this time next year.