Increasing downside risks for the wheat crops in Europe, Canada and Argentina

The ongoing hot and dry conditions are reducing hopes of the EU wheat crop achieving close to last year's record level. The same applies to the crop expectations in Canada: in the space of two weeks, the proportion of plants rated "good" or "excellent" in Saskatchewan, the most important growing province, decreased by 5 percentage points to just 52%. 

Dry conditions are also hampering planting in Argentina and have resulted in a downward revision of the crop acreage for 2015/16. The Grain Exchange in Buenos Aires estimates that the crop will now be down by 15% year-on-year. 

"Our assumption that the latest price increase was partly due to short covering has been confirmed - short-term-oriented market participants switched their previously considerable net short positions in wheat and corn to net long positions in the last reporting week", added Commerzbank.