28 Jul 2021

Weather markets used to occur only a few times within the season. Rarely during drilling, often during crop development and sometimes during harvest. However for the last two years, it has been an ongoing story, moving from one hemisphere to the other, throughout the season. One could blame La Nina for South America. Yet what about the weather issues in the UK, Ukraine, France, Canada? Weather incidents seem to have become the rule rather than the exception and the impact is major upon both supply and demand. This never-ending weather market is bringing more instability to your yields as well as your prices.

Harvest in Europe and the Black Sea is nearly two weeks behind average and changing weather conditions do not allow operations to speed up. The earliest yield results are very mixed. Russia is disappointing, Ukraine and Romania are excellent so far. In Europe, yields seem to be decreasing as harvest moves north. Most farmers report very mixed results with excellent fields and very disappointing ones. We anticipate the UK harvest to be very similarly mixed.

In the US and Canada, conditions remain warmer and drier than normal and the near-term forecast does not show much change.

Markets are clearly nervous with very large daily price volatility. Harvest pressure hasn’t started anywhere as most farmers are not in a hurry to sell. They may well be right!

For the time being we maintain our unchanged market view: limited downside for prices and a potential bullish scenario could soon develop. It will all depend on harvest results, both here and in the US as any further tightness would be strongly priced to ration demand.

Sébastien MALLET