The global grain markets are currently focused on weather conditions in the Northern Hemisphere, with concerns rising about various key production regions experiencing their summer crop development. This has created uncertainty about the potential size of grain supplies and how they will balance with ongoing demand. Meteorologists have issued alerts for intense heat expected to hit the United States, particularly the East Coast, where recent temperatures have already surpassed 35°C and continue to rise.
Parts of Asia and Africa are also facing climate challenges, leading to production losses for crops such as rice and corn in China. According to the Commodity Weather Group (CWG), about a quarter of China's plains are experiencing water stress, impacting corn pollination as temperatures soar above 37°C.
Studies suggest that 2024 could end up as one of the five hottest years on record. Such information ensures intense volatility in futures markets, especially agricultural ones. For example, robusta coffee futures on the London Exchange have repeatedly hit new highs due to a drought in Vietnam, the world's largest producer, jeopardizing the crop and the country's competitiveness. This has significantly affected the arabica coffee market on the New York Exchange.
Rice prices have also surged globally due to the imbalance between supply and demand. Prices for one of the world's most consumed grains have risen everywhere. In April, heavy rains in China, the largest producer and consumer of rice, led to significant crop losses. These developments affected markets in India, the second-largest producer, and Thailand, where prices hit 15-year highs. Russia, facing potential state emergency declarations due to frost and severe dryness damaging over a million hectares of crops, saw wheat among the hardest hit. Conditions have since improved, causing prices to drop, but the CWG reports that a quarter of Russia's wheat and corn-producing areas remain very dry, with rain expected only in the southern regions soon.
Conversely, EU countries are expected to see better conditions, with promising harvest forecasts from nations like Romania, which could hit a record 10.5 million tons, and Bulgaria. In France, however, excessive rain is causing concern among farmers. Consequently, Black Sea region wheat is cheaper and more competitive compared to major competitors, as shown by a Bloomberg graph. The market is under pressure from the advancing winter wheat harvest and spring wheat planting in the U.S., where weather conditions are currently favorable for fieldwork in both seasons, keeping market agents on alert.
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