Argentina has emerged as the latest country to face potential setbacks over wheat, with adverse weather threatening its recovery from a century-low in plantings.
"A new concern is bubbling up in Argentina. It is dry," US broker US Commodities said, noting that 79% of the South American country's intended wheat acreage had been planted as of last week. Typically, farmers have all but finished sowings by now.
The concerns were echoed by Rabobank analysts, who warned of a "great deal of uncertainty" regarding Argentina's wheat crop, South America's biggest, and one typically drawn on by regional importers such as Brazil.
"Dry conditions in some areas of the country, especially in the south and west of the wheat region, might prevent planting intentions from being fully realised," the bank said.
Dry weather has already cut hopes for crops in the European Union, Western Australia and, in particular, Kazakhstan and Russia, sending wheat prices jumping on international markets.
'Climatic and economic uncertainties'
The range of initial production estimates for the crop was "wide", Rabobank added, noting forecasts "varying from private analysts' 10m tonnes to the [Argentine] Ministry of Agriculture's 15m tonnes".
The bank itself, highlighting "climatic and economic uncertainties", pegged the drop at 10m-12m tonnes.
Fears are brewing for the coming of a so-called La Nina weather pattern, associated with cooler-than-normal Pacific water temperatures, and typically associated with dry weather in Argentina.
Drought was a big factor in a slump of more than 30% in Argentina's wheat area last year, with farmers also blaming government export curbs, which have been partly relaxed this year.
However, rain in many parts of Argentina's wheat belt has raised hopes among some analysts that the country can avoid significant La Nina damage this year, with the government blaming sowing delays largely on "constant rains" in the province of Buenos Aires.
More hot weather
The Argentine warnings came as analysts revealed further rises in prices of Russian wheat last week, with the grain, free-on-board, attracting $210 a tonne, compared with $198 a tonne a week before, according to the Institute for Agricultural Market Studies.
SovEcon said that, in the domestic market, poorer fifth-grade wheat had risen most strongly, soaring by 950 roubles per tonne to 4,450 roubles per tonne. The price of third-grade milling wheat soared by 600 roubles per tonne to 4,850 roubles per tonne.
And Russia and Kazakhstan, and potentially eastern Ukraine, are set for further hot and dry weather, with some areas forecast to receive temperatures of up to 108 degrees Fahrenheit (42 degrees Celsius).
"The forecast for the week does not remain optimistic... with a further rise of expected temperatures," Agritel, the Paris-based consultancy, said, adding that temperatures in Russia had hit record highs on Saturday.
However, the quality of the French crop "seems to be good", Agritel added, even if it was difficult to make national yield forecasts from diverse results.
Indeed, many investors took the opportunity to book profits, after gains of more than 20% this month.
July's wheat price gains
Gains from close June 30 to close on July26 for near-term contracts, except in Paris, where nearest-but-one lot is used
"The market has got to the stage where it needs fresh supportive information even to stand still," a UK trader told Agrimoney.com.
Other investors said that short-covering in the US may peter out as force for supporting prices, with funds now long 25,000 contracts in wheat.
"This is a 57-week high in the fund long position," broker US Commodities said.
Chicago wheat for September closed down 1.1% at $5.89 ½ a bushel, with its Kansas equivalent easing 0.5% to $6.12 a bushel. The Minneapolis September spring wheat lot ended 1.0% lower at $6.22 a bushel.
In Europe, Paris wheat for November finished 1.1% lower at E177.50 a tonne, with London wheat for November down 1.5% at £131.25 a tonne.