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The wheat market is booming as the world's leading producers falter in the face of a drought that has slowed production. After several years of exceptional harvests, the wheat market is expected to tighten sharply as Russia, Australia and the EU countries face torrid temperatures.
In Australia, the state of New South Wales announced, while the German Agricultural Association asked for 1 billion euros in financial aid from federal and state authorities.
"After the huge surpluses of the past two or three years, we are really facing a big change," said Omnès. In response, the reference price of Euronext's milling wheat reached 203 euros per tonne in four years, badysts downgrading the estimates of EU wheat production.
Wheat production in Europe is expected to fall below 130 m For the first time in six years, according to Strategie Grains, the German crop has been reduced to around 20 million tonnes, the lowest level since 2003.
Argentina's production was also affected by the poorest crops, while Russia, the main producer, is expected to experience a sharp decline in production. As a result, the International Grains Council lowered its wheat production forecast for the 2018-2019 crop year to 721 million tonnes, its lowest level in five years. Meanwhile, end-of-year stocks, which serve as buffers against unexpected deficits, are expected to fall by 7%, falling for the first time since 2011.
Amy Reynolds, an badyst at IGC, noted that There was a "people were more focused on trade wars but now they are starting to realize that the availability of exports is going to be tighter."
The decline in production comes as some agricultural experts have warned that the depressing effect of trade stress on major food products has obscured the risks of a sharp rise in prices.
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