Grain prices soared as analysts highlighted the drought damage to French wheat from drought with Strategie Grains cutting its harvest estimate by 1m tonnes - and Agritel forecasting a crop more than 3m tonnes lower still.
Agritel also warned of a sharp drop in France's exports, leaving the country on course to lose second rank among world wheat exporters.
Wheat prices soared by more than 3% in London, and by 5% in Chicago in the US, where growers are also suffering adverse weather, with too little moisture in hard red winter wheat areas, and too much further north where farmers are trying to catch up on spring plantings.
Concerns have also grown for Russia suffering what would be, for some parts, a third successive summer drought.
Weakened forecasts
Strategie Grains analysts ditched expectations of a rise in French soft wheat production this year, despite a rise in sowings, saying dry weather had cut its potential to less than 35m tonnes, compared with 35.6m tonnes in 2010.
| Grain prices at 15:50 GMT Chicago wheat: $8.07 a bushel, +5.7% Chicago corn: $7.48, +3.9% Kansas wheat: $9.28 a bushel, +3.8% Minneapolis wheat: $9.78 a bushel, +4.4% London wheat: £188.00 a tonne, +4.2% Paris wheat: E239.00 a tonne, +3.2% Prices for July contracts on US exchanges, and November lots in Europe |
However, analysts at Agritel warned that even Strategie Grain's downgrade may not be enough, pegging the crop, in their first forecast, at 31.7m tonnes, representing a decline of 11.5% on last year's harvest.
Hot and dry
Agritel, which like rival Strategie Grains is based in Paris, said that its forecast reflected a cut in 13.0% drop in yield prospects to 6.31 tonnes per hectare, the lowest for at least six years, a "direct consequence of a lack of rain during the past three months".
France has imposed limits on water restrictions in 28 out of 96 of its administrative regions because of the lack of rainfall, which last month amounted to only 29% of the average for 1971-2000, according to government data.
Both analysis groups warned that they may revise their figures lower if rain is not forthcoming, with Strategie Grains flagging "high temperatures expected for the weekend".
US-based meteorological group WxRisk.com flagged late on Tuesday that forecasts for France and Germany had turned "very dry" for the six-to-10 day period, but with "significant rains" likely in western and central France in the 11-to-15 day outlook.
Export impact
Agritel added that France's drop in production would be reflected its exports, cutting potential by some 6m tonnes.
Such decline would demote France significantly in the world export league, in which it is set to finish second in 2010-11, behind the US, following poor Black Sea and Canadian crops.
However, the group downplayed the impact on international grain prices of France's downgraded export potential, given the rebound in shipments expected from the former Soviet Union.
"This drop in French supplies could be compensated by the likely return of Russia and Ukraine on the export market," Agritel said.
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