A nervous grain market has tumbled from last week’s contract highs. Prices fell again on Tuesday, with November 2012 feed wheat futures closing at £180.30/t, a fall of more than £10/t on the day and following a £4/t drop on Monday.

Ex-farm feed wheat prices on Wednesday morning stood at about £170/t for harvest and £175 for November, with regional variations.

Key influences have been the worsening eurozone economic problems, with the euro’s value slipping below 78p, alongside slightly improved US weather forecasts which could slow or halt the deterioration of crop conditions.

However the US drought has been confirmed as the worst since 1956 and crop condition the poorest since 1988. The condition of US maize has deteriorated for the seventh consecutive week with just 26% of the crop seen in good to excellent condition.

US crop analyst Martell reported some farmers cutting maize crops originally intended for grain, for forage animal feed instead.

Ratings for soya beans have fallen this week too, with 31% of the crop in good to excellent condition compared with 34% last week and just half the level of last year’s 62%.

Spring wheat is faring better, with 60% rated as good to excellent condition, down 5% points on last week, and 14% points less than last year and harvest starting earlier than normal. There are also growing concerns over establishing next year’s wheat crops.

The EU’s MARS crop monitoring unit’s latest report on Monday (23 July) split the fortunes of Europe’s crops between the cold, wet northern countries and scalding temperatures in the Iberian Peninsula and Black Sea areas.

Spain, Italy, Hungary, Romania, Bulgaria and the Ukraine have been hit the hardest by drought and heat. Kazakhstan cut its wheat crop estimate this week to 12.8m tonnes, compared with 21m in 2011 and 9m in 2010.