Wheat prices returned within 4% of £200 a tonne in London,
and set a contract high in Paris, as a caution over rain damage added to upward
pressure on futures from a buoyant Chicago market.
London wheat for November delivery jumped 2.7% to £193.00 a
tonne, a high for the contract, which has now soared by one-quarter over the
past month. The contract closed at £191.25 a tonne, a gain of 1.7%.
In Paris, the November lot rose in line to a contract high
of E267.50 a tonne before easing to finish at E264.75 a tonne, a gain of 2.3%.
The gains reflected in part a strong performance by wheat on
US markets, as forecasts for more hot and dry weather for the US Midwest sent prices
of corn, a rival for uses such as feed, soaring 4% in Chicago.
Chicago wheat for September closed 4.3% higher at $8.84 ½ a bushel,
the highest finish for a spot contract since August 2008.
However, in the European Union, fears rose further for crops
in western countries, including France, the bloc's top producer, thanks to
heavy and persistent rains which have slowed the harvest.
Just 3% of French soft wheat was harvested as of July 9,
compared with 47% a year ago, according to official data released last week.
"Europe is not just a follower," FCStone said, noting a
report of northern French wheat as "heavy, late and dirty", although the southern
crop is viewed as "very good".
"The entire north western block of northern France, the UK
and Ireland is suffering massive disease pressure," with rejections of some
crops on grounds of toxic fungal residues "now all but an inevitability, let
alone the yield losses".
"The British Isles [crop] will be a quality disaster."
Separately, UK grain traders at a major European commodities
house reported that "fungal infections of wheat crops, especially with fusarium,
are now being reported as commonplace almost everywhere.
"This raises the prospect that this will be the first season
ever when every parcel of wheat destined for human consumption for delivery
after August 1 will need to have had a Don [fungal toxin] analysis carried out
Some traders "are already beginning to write off the UK
quality wheat crop from their calculations", the commodities house said, adding
that in northern France "there is escalating concern about the quality of the
wheat crop due to the incessant rain, as there is in Germany".
Separately, the UK's HGCA crop bureau on Monday flagged "doubts
over final yields" for harvests of wheat and other crops, following rains which
have broken a series of records,.
"Weather for developing crops has been poor over recent
weeks, with low sunshine levels and high rainfall during the critical grain-filling
period," said Jack Watts, HGCA senior analyst.
"As a result, uncertainty remains around yields."
The HGCA comments came as it pegged British wheat sowings at
2.0m hectares, a rise of 2.2% year on year, with winter barley plantings seen
recovering 4.5% to 368,000 hectares.
Spring barley sowings were estimated at 618,000 hectares, a
rise of 4.6%, nearly half in Scotland, where plantings jumped 16% to a record
The "main driver" of the Scottish increase "is likely to
have been the wet Scottish autumn in 2011, diverting land from winter to spring
cropping", the HGCA said.
"Continuing optimism in distilling demand may also have been
a contributory factor."
However, the bureau cautioned over the prospects for the UK
rapeseed harvest, despite estimating sowings at a record 736,000 hectares, up 4.5%.
"The record area of 2012 may not translate into record
production as crops have been subjected to poor weather conditions in recent
weeks," the HGCA said.
In Paris, rapeseed for August rose 1.2% to a record closing high of E523.25 a tonne.
The UK has, over the last couple of seasons, been a major exporter to continental Europe, helping fill a void left by disappointing German rapeseed output.