The Impact of Weather on Wheat Production in Europe

Europe is currently experiencing heat waves and poor rainfall, which are expected to negatively impact wheat yields. According to the European Centre for Medium-Range Weather Forecasts, parts of Greece, eastern Spain, and southern Italy are facing severely high temperatures. As a result, the EU Joint Research Centre’s Monitoring Agricultural Resources unit has reduced its soft wheat yield estimates for the marketing year 2023-24.

This decrease in wheat output could potentially lead to a rise in prices in the coming months and may impact Europe’s wheat exports during the season. The European Commission has already forecasted a decline in EU soft wheat output for 2023-24 compared to the previous estimate. This reduction in supply, coupled with potential export limitations, could have significant implications for the European wheat market.

In addition to wheat, there are other commodities in Europe that are also facing challenges. The spread between European hot-rolled coil steel and raw materials has narrowed as steel prices continue to weaken. This is due to factors such as stable costs, trade financing constraints, and excess production. The decline in steel prices may impact the overall steel market in Europe.

Furthermore, the price of used cooking oil (UCO) in Asia has staged a rebound. Robust buying from trading houses, as well as increased shipments of Chinese UCO to the US and Europe, has contributed to this price increase. Market participants in China expect UCO levels to continue trending higher as demand remains steady.

Another development is the changing dynamics in the coal market. Russian coal exports are slowing down as buyers are seeking cheaper alternatives, including Australian coal. The average price of Russian coal has seen a gradual rise, while Australian coal prices have fallen. This shift in market preferences may lead to a decline in Russian coal sales volumes in the second half of 2023.

Overall, the weather conditions in Europe, along with other market factors, are likely to have significant implications for wheat production, steel prices, used cooking oil, and the coal market. Market participants and industry players will need to closely monitor these developments to assess their potential impact on the respective commodities.

Tags: prices, heat waves, Europe, poor rainfall, Spain, wheat, yields, shipments, output, Italy, Greece, high temperatures, export, estimates