Dry Conditions On Both Sides Of The Atlantic

Drought from Paris, France to Paris, Texas has farmers and grain dealers looking upwards – to the skies for signs of rain.

U.S. wheat prices are on their way to their biggest weekly gain and European benchmark wheat futures have jumped just under 30 per cent in the past nine weeks as wheat belts on both sides of the Atlantic show signs of irreversible drought damage.

“We need Mother Nature’s help to save a crop, which whatever happens will be mediocre,” said a senior European trader, referring to France, the EU’s biggest wheat producer.

An unusually dry and hot spring in top EU wheat countries, and severe dryness in Texas, Kansas and Oklahoma, have revived memories of last year when drought ravaged Russian and Ukrainian wheat harvests and choked off supplies from the key exporters. This year, Black Sea wheat may go some way to meeting lost EU and U.S. production but markets remain skittish.

PARCHED EUROPE

A three-month-long drought has prompted curbs on water use in a third of France and some analysts are predicting its soft wheat output will fall 11.5 per cent this year, to 31.7 million tonnes. That could potentially halve its soft wheat exports.

Germany, the EU’s second-largest wheat producer, is facing a 7.2 per cent drop, to 22.3 million tonnes, along with a drop in quality.

In the United States, the world’s top wheat exporter, the hard red winter (HRW) wheat crop is showing signs of distress. The condition of HRW – a high-protein variety which accounts for nearly half of U.S. wheat exports – has steadily deteriorated throughout the spring in Texas, Oklahoma and key parts of Kansas.

“It is pretty bad,” said Kansas climatologist Mary Knapp. “For a lot of these areas… the last significant rainfall was in July of last year.”

The overall U.S. winter wheat crop is to be estimated as the smallest in five years.

Meanwhile, the soft red winter wheat belt in the eastern U.S. Midwest faces the opposite problem as excessive spring rains were likely to drag down crop quality while flooding destroyed thousands of acres just weeks from harvest.

In drought-traumatized France grain farmer Pascal Seingier cannot see the clouds, let alone any silver lining.

“It’s all dry. We have had almost no rain in weeks and it’s now clear I will not have the same harvest as usual. Usually Mother Nature repairs what it has broken, but it won’t happen this year.”

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