Investors have yet fully to factor in Europe's grain losses to last month's cold snap, Offre Demande Agricole said, ditching hopes of a rise in winter grains production this year.

Offre Demande Agricole (ODA) warned that it may have underestimated grain losses to frost in France, the European Union's top producer, with a 2m-tonne figure revealed earlier this month.

"Since this survey, some of the eastern regions of France have reported losses of up to 30% of wheat acreage, meaning the decline in French production could be much greater," ODA said.

The comments come the day after analysis group Strategie Grains acknowledged it too had underestimated frost losses, as it cut by 1.6m tonnes its forecast for Europe's forthcoming wheat harvest, and said that winterkill had affected 5-20% of France's winter cereals area.

"Losses on this scale are highly unusual in France. They can be attributed to the very exceptional circumstances so far this crop year: abnormally mild weather through the autumn and early winter and then the late plummeting of the mercury," Strategie Grains said.

Agritel on Monday said that 1.9m tonnes of French wheat may have been "lost at national level".

Germany and Poland

Furthermore, ODA warned that crop inspections enabled in Poland by the spring thaw had revealed losses of 10-20% of winter grains in central areas, and 20-30% further west, districts which between then represent the country's top wheat-growing regions.

And crops in Germany, the EU's second-ranked wheat grower, too may have suffered more than initial forecasts suggested.

"Conditions in Germany are not that dissimilar to those seen in the west of Poland and should therefore have a similar impact," ODA said,

"ODA's sources are suggesting a loss in area of 6-7%."

'Yield potential questionable'

The data combined suggested that Europe's winter grains harvest, which had looked set to rise by some 3m-4m tonnes on last season, would in fact fall 2m tonnes, a decline that investors appeared not to have factored in.

"Even though the area lost to winterkill will mainly be replanted with spring cereals, it seems that the European markets have not sufficiently integrated this information, especially as the yield potential of the remaining areas is still questionable," ODA said.

Crops in many western European areas are now battling with undue dryness which US-based weather forecaster WxRisk.com said was likely to last for a month, bar a "couple of rain events potentially next week".

Paris wheat for May closed down 0.2% at E213.75 a tonne after earlier touchinga one-month high of E215.25 a tonne.

ODA will next week reveal more detail on its estimates, a spokesperson told Agrimoney.com.