Wheat prices rise as European drought fears grow

Ongoing dry weather across Europe has boosted grain markets over the past week, with London wheat futures reaching £178.50/t for May on Tuesday (27 March).
Although profit taking eroded some of those gains, ex-farm values ended the week to Wednesday up by almost £5/t to about £158/t. New crop prices also improved, to about £155/t for September. “From a climatic point of view, things are slowly getting worse in Western Europe, where there is still no rain forecast,” said a report by analyst Agritel. “Frost damage also seems to be more important than initially estimated, with damage in Germany that wasn’t taken into account until now.” Many producers were having to resow winter crops with spring barley and maize.
Across the Atlantic, crop conditions were getting better in the US, with 59% of wheat rated good to excellent in Kansas, up from 54% last week. However, traders were nervously awaiting the latest US Department of Agriculture report on US stocks and corn and soybean acreage.
Oilseed rape prices have also risen over the past week, with reduced production forecast in Europe, Ukraine and South America. Spot markets settled at about £379/t ex-farm on Wednesday, with new crop at about £363/t for September.
Market report