Considerable decline of EU wheat crop expected, downside risks also in Ukraine and Russia

Despite a lack of rain and a sharp fall in the quality of the soft wheat crop, agricultural analysis firm FranceAgriMer in France still anticipates a large wheat crop. This is because winter wheat is grown for the most part in France, which was hardly affected at all by the ongoing drought.

The unfavourable weather conditions are still keeping the European grain markets on tenterhooks. Ukraine will downwardly revise the estimates for the upcoming grain crop if the dry spell continues next week, says the country's agricultural minister. In June, a crop of approx. 60 million tons of grain was still envisaged, while exports were expected to remain at last year's record level of 34 million tons.  

By contrast, the European agricultural lobby association Copa-Cogeca envisages the EU wheat crop declining by just shy of 7% to 144.4 million tons. At 137.1 million tons, Copa-Cogeca's estimate for the soft wheat crop is also below the corresponding estimate of the European Commission. 

Unlike France, Russia has seen an enormous amount of rain in some places, which has delayed harvesting in the southern regions. If demand for wheat from the EU increases as a result, this could lend further buoyancy to the wheat price in Paris, says Commerzbank. 

Some market participants are concerned that the delays to harvesting could lead to a shortage of grain supply for contracts already concluded.