Wheat Gets Lit
Good Morning – Wednesday, June 24
Look at wheat light up today.
Chicago and Kansas City wheat futures are both gaining strength, largely because of what's happening with French milling wheat. If you're not aware, that crop has been under significant stress in France. In just a few days, wheat prices there have already recovered roughly half of the losses seen earlier this spring.
To put it in perspective, there's still room for additional upside. However, it's actually the corn crop that's facing the biggest problems right now.
Take a look at November French corn futures. Prices are already challenging last summer's highs, with values increasing more than €20 per metric ton in just two weeks. For comparison, that's roughly equivalent to a 60-cent rally in U.S. corn futures.
So what's driving the move?
France is dealing with extreme heat. Temperatures reached 107°F in Paris yesterday, with parts of central France hitting 112°F. This heat has persisted for some time and, while dryness hasn't been quite as severe, the combination of heat and limited moisture is taking its toll.
The weather pattern is now spreading into Germany and Poland, where corn is currently pollinating. That's a critical stage for yield development.
The wheat crop is already beyond flowering and heading toward maturity, so the heat is more likely to impact test weights than production. Corn, however, is much more vulnerable.
As this heat wave moves across Germany and Poland through the weekend, and with little meaningful rain expected until sometime in July, European corn production remains at risk.
That could increase demand for U.S. corn exports into Europe in the weeks ahead.
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