Global Agriculture Monthly: The missing weather risk premium

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Global Agriculture Monthly: The missing weather risk premium

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Global Agriculture Monthly

The missing weather risk premium

Europe’s heat stress is no longer cyclical 16 July 2026

As concerns grow over what could become one of the strongest El Niño events on Commodities

record (see our May 11 2026 report), Europe is enduring another summer of extreme Global

heat. France has already experienced two major heat waves (temperatures approaching Global Commodity Research

43°C). More broadly, Europe has warmed nearly twice as fast as the global average over BofA Europe (Madrid)

the past decade. With the past three years the hottest on record, we believe the region's Daryna Kovalska

heat stress is becoming structural rather than cyclical. Commodity Strategist MLI (UK)

+44 20 7996 1023

Yet, market remains focused on US weather… daryna.kovalska@bofa.com

Thus far, European heat stress has failed to spark a sustained rally in agricultural Francisco Blanch Commodity & Deriv Strategist

commodities (on CBOT specifically), even in corn, the crop most exposed to weather BofA Europe (Madrid)

risks in Europe. Instead, markets remain focused on US weather as the critical corn +34francisco.blanch@bofa.com91 514 3070

pollination gets underway. Conditions have been favorable so far, but forecasts of hotter

and drier weather in parts of the Corn Belt raise yield risks.

…while European crop losses are too large to ignore

In our view, the market is underestimating the consequences of European heat damage.

We expect EU corn output to fall to 50 mn t or less, well below the USDA's 53.8 mn t See abbreviations and definitions in

estimate, pushing imports to a record 25 mn t versus 22.5 mn t currently projected by Exhibit 39.

the USDA.