Wheat futures set fresh contract highs in Paris on Friday as official data showing an unusually steep decline the condition of the French soft wheat crop, amid spreading dryness, added to the boost from a well-received US report.
Paris soft wheat futures for September gained 2.6% to E424.50 a tonne, before easing back to E419.00 a tonne in lunchtime deals, a gain of 1.3% on the day.
The headway followed the release of data from farm office FranceAgriMer showing a tumble of 7 points in the proportion of French soft red winter wheat rated “good” or “excellent”, as of Monday.
While still leaving the rating at 82% good or excellent, above the seasonal average of 74% on GrainPriceNews calculations, a decline of that size is unusual on FranceAgriMer data, and the largest since a 10-point tumble witnessed in July 2016.
That year ended up with the lowest French soft wheat harvest of the century so far, down more than 30% year on year.
Other French grain crops are deteriorated markedly last week, with the winter barley score down 7 points at 79%, and the durum rating down 6 points at 77%, while the reading for the less-established spring barley crop slumped by 12 points to 76%.
The data come amid growing worries over persistent dryness in France, the European Union’s top wheat producer and exporter.
“The climatic situation in France remains a major concern,” said Agritel, noting that many farmers had sold wheat forward based on yield assessments which were now in decline.
While the country is expected to receive thunderstorms next week, “they are not expected to solve the water stress problem except very locally,” the analysis group said.
Earlier this week, FranceAgriMer itself noted that, after “particularly dry conditions in most” of Europe, France – as well as Austria, Italy the Netherlands and Ukraine – were witnessing “significant drought”.
Drought in southern France and northern Italy was “impacting the growth of winter crops and delaying sowing”.
Catherine Cauchard, head of FranceAgriMer’s crop monitoring service, said that France was “reaching a tipping point for some soil type”, adding that growers were “hoping for rain so that yield potential can be maintained”.
‘Sharply elevated prices’
The data come amid a squeeze on world wheat supplies which data from the US Department of Agriculture on Thursday forecast will not be resolved even in 2022-23, forecasting a sixth successive fall in world inventories, to their lowest since 2013-14.
“Wheat cash and futures prices are expected to remain sharply elevated through the first part of the marketing year,” the USDA said, in a briefing which provoked sharp rises in many wheat contracts.
Kansas City hard red winter wheat for July leaped by 5.8% to finish at $12.70 a bushel, the highest close for a nearest-but-one contract in 14 years, as did Minneapolis spring wheat for July, in settling up 4.8% at $13.16 a bushel.
Paris wheat for September added 2.6% on Thursday, to close at E413.75 a tonne.