Wheat market reacts stoically to heat and drought

It is hot in Western Europe and dry in the United States, yet the wheat market is not overheating. In Paris, wheat prices rose slightly on Tuesday, but in Chicago prices stabilized or even went down a bit. The September contract on the Matif in Paris rose on Tuesday by €1.75 to €214.25 per tonne. That increase is attributed to lower harvest expectations in Europe as a result of the heat wave. Today, the market has already forgotten that. On Wednesday 27 May, the price fell again around noon toward €212 per tonne. In Chicago, the July contract for soft red wheat fell by 10¾ cents to $6.35½ per bushel. September shows a similar move to $6.48¼ per bushel. This puts the price at around €205 per tonne when converted. This decline increases the difference with the price in Paris again. According to the American agriculture ministry USDA, the condition of the wheat has deteriorated slightly compared with last week. Analysts had previously expected a slight improvement. This means growers are still left with a crop that is historically in very poor condition. However, that appears to be insufficient to push prices higher. In Europe, the European Commission slightly lowered the wheat forecast compared with last month. For soft wheat, the Commission now expects a harvest of 126.9 million tonnes. In Germany, wheat is performing better according to the Commission than previously estimated, but in Poland the forecast has been lowered. The wheat figures in Czechia and Slovakia have also been revised downward. In Southern Europe, the forecasts compared with last month are also somewhat less favorable for yields. This is reflected in lower estimates for Spain and Portugal.