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Investor caution as Europe forecasts heatwave

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Analysts said heatwave conditions expected to affect parts of Europe next week will force commodities investors to be ’cautious’ during a key development stage for crops such as corn.

Official forecasters in France predict temperatures will be ’hot’ to ’very hot’ with a risk of heatwave, while meteorologists from Marex Spectron did not rule out the record-breaking temperatures which affected the country at the end of last month.

Analysts have been watching the crop condition figures and crop progress figures as an indicator of about the potential impact of weather on the development of spring crops including corn, sunflower and wheat.

 

’Strong heat wave’


Meteo France anticipated the next seven days will be a ’hot week to very hot with a risk of heat wave on all regions from the beginning of the week’.

 

It added: "Still a lot of uncertainty about the evolution of these high temperatures for the weekend. From the middle of the week, thunderstorms are likely to develop in the west of the country and on the relief."

Giacomo Masato, senior meteorologist at Marex Spectron, said a second ’strong heat wave’ would affect Europe next week, although it was difficult to assess strength.

However, he said, "magnitude could be as strong as the one we had two weeks ago," reaching many parts of the continent including France, southern UK, and all of the continent including Germany, Switzerland, Italy, Austria and up to Poland and Scandinavia.

He said models suggested temperatures could be elevated for a week, with "relaxation" towards the end of the week. However, "It is now hard to tell whether there will be a second pulse during the following week."

FranceAgriMer figures published on Friday show 73% of soft wheat, which is France’s main cereal crop, was rated either good or excellent in condition in the week to July 15 - unchanged on the

previous week, but down 7% on four weeks earlier.

 

Crop progress


French farmers had harvested 33% of this year’s soft wheat crop, up from 9% a week earlier, and traders and analysts hope that the plantings will escape significant damage from the late June heatwave which saw France watch the thermometer mercury rise to a record-breaking 49.5 degrees Celsius in France.

For corn, which is going through a critical development stage of the growing season, about 74% of grain was rated at an estimated good/excellent condition - down from 78% a week earlier, but well above 71% during last year’s drought.

Analysts at Agritel said the prediction of hot weather "forces" operators to be "cautious", especially with corn, as the November 2019 Euronext futures contract maturity had been edging towards and above E176 per tonne.

CRM AgriCommodities said Europe’s wheat harvest was "making good progress" amid news that Germany’s farm cooperative had pegged production at 23.8m tonnes - compared to 20.3m tonnes for last year, although somewhat off the 24.7m tonne five-year average.

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