Europe’s cows could soon be chomping on more corn as drought across the continent drives up wheat prices.
Hot and dry weather in recent months has hit European wheat fields hard, pushing U.K. feed-wheat futures’ premium over French corn to a four-year high. Because both grains are used to feed animals, that’s boosting the appeal of corn imports, already widely expected to be near a record this season.
“The main impact will be a decrease in the use of feed wheat compared to corn, as well as more imports of corn into the EU,” said Alexandre Boy, an analyst at Paris-based farm adviser Agritel. That “should help consumption of wheat stay low for animal feed, and make sure that the price does not get too high.”
The heat and dryness that’s plagued much of northern Europe has had a bigger impact on wheat, which is planted earlier than corn. Farmers in the European Union are expected to collect their smallest wheat harvest in six years in the season that started this month. The situation has become so bad that the bloc moved to relax some key environmental rules to help bring relief to farmers.
U.K. feed-wheat futures have rallied 31 percent this year. The grain is currently about 24.50 euros ($28.70) a metric ton more expensive than corn futures traded in Paris, a regional benchmark.
Copyright 2018, Bloomberg