Further drought damage to China's crops, or a signal of poor  global wheat production next year, look the best hopes of reviving wheat prices, Agritel has said, as European prices tumbled to fresh lows.

The Paris-based consultancy said that prices looked set to remain weak, given "abundant" northern hemisphere production and waning prospects of a hiccup in Australia's harvest.

Ukraine on Wednesday became the latest country to upgrade its output forecast predicting a harvest of 45m tonnes compared with a previous estimate of 43m-43m tonnes.

Separately, Kiev-based analysis group UkrAgroConsult lifted its forecast for the country's grain harvest by 1m tonnes to 41.7m tonnes.

'Decreasing competitiveness'

The comments came as London November feed wheat slipped to a fresh 2009 low of £91.00 a tonne before recovering some ground to close at £92.25 a tonne, down £0.75 on the day.

Paris milling wheat for November ended E1.50 lower at E121.50 a tonne, E1.25 above a contract low hit earlier.

The strength of the euro, which hit a 2009 high against the dollar of $1.4585, also depressed prices by "decreasing our international competitiveness", Agritel said.

Prices looked likely to continue declining "in the coming weeks", with a rebound unlikely until data showed weak prospects for the 2010 harvest, or "the worsening of the Chinese situation".

China is suffering a drought in many of its key grain growing regions, with some analysts predicting the corn harvest could come in about 20m tonnes below official forecasts. 

Crop quality 

Agritel also highlighted Algeria's "very good" cereals harvest of 5m tonnes, which "should reduce the [country's] import requirement"

Separately, French farm office FranceAgriMer pegged the country's soft wheat crop - the European Union's biggest - at 37.5m tonnes, 300,000 tonnes more than French agriculture ministry data released on Tuesday.

FranceAgriMer added that the quality of the crop was satisfactory, if lower than last year's.