World grain markets have risen sharply over the past couple of weeks, aided by bad weather and increasing demand.

London May wheat futures rose by £4.50/t in the week to Wednesday (13 May), bringing the increase to £7.75/t over the past fortnight. November futures increased even morem, a £9/t rise in two weeks.

“The US Department of Agriculture report came out yesterday (12 May), signalling lower production than expected,” said Openfield’s Paul Taylor. It forecast world wheat production at 658m tonnes, 4% down on last year’s record, but still the second largest crop ever realised.

But dry conditions across the USA meant its estimate of US wheat production was sharply lower than expected, and 19% down on last year. Europe, eastern Europe, Russia and Western Australia were also struggling with a lack of rain, boosting Britain’s new-crop markets to about £124/t ex-farm and dragging old crop prices up to about £108/t for May.

Oilseed rape markets have also soared over the past fortnight, rising by almost £20/t to about £275/t ex-farm for spot movement, and about £283/t for November. Although the USDA forecast a record global crop, stocks were tighter than expected, so markets remained sensitive to bad weather, said Gleadell’s David Woodland.

“We’ve got a very strong soya market at the moment,” he said. The weaker dollar was supporting US prices, and signs of economic recovery had also boosted crude oil values and sparked a return of fund buyers to the commodity markets. “The funds are showing a bit more confidence in building up their commodity portfolio, and a feelgood factor is starting to come back into the market.”