The dryness in southern Russia are a "major concern" for the country's grain production prospects, Black Earth Farming said, stoking fears for a disappointing world wheat harvest which drove prices higher again.

"Lack of rain in the south remains a major concern," Black Earth Farming, one of Russia's biggest farm operators, said.

There were "downside risks" to early estimates of a Russian grains harvest of 90m-95m tonnes "if the dry and hot weather in May persists".

The comments fuelled concerns over the world wheat harvest also stoked by an official estimate that German winter wheat area making it to harvest will fall 9.5% this year to 2.87m hectares, thanks to frost damage.

"The strongest decreases were observed for winter wheat cultivation in Hessen, -42%, and Lower Saxony, -21%," Germany's federal statistics office said.

'No significant rains'

Meanwhile, in Ukraine, farm experts within the official meteorological office cut to 10m-12m tonnes, from 11m-14m tonnes last month, their estimate for the country's wheat harvest, hurt by autumn drought, winterkill and now a dry spring in parts too.

Some parts of Ukraine, such as Kherson and Mykolayiv, had seen "no significant rains over the last month".

The US Department of Agriculture has estimated the harvest at 13.0m tonnes, and the UN's Food and Agriculture Organization at 14.0m tonnes.

A harvest of 10.0m tonnes would be less than half that last year, and the second lowest in the post-Soviet era, beating only the 3.6m tonnes reported in the freak 2003-04 season.

'Not panicking yet'

Richard Warburton, the Black Earth chief executive, added in comments to investors that "we are entering the part of the year when rainfall and relative rainfall in different parts of Russia become important".

But while the group's own operations, in the Black Earth regions, were "certainly experiencing dry weather", conditions were "more severe in the south and Ukraine".

"We would like some rain for our winter wheat crops, but we are not panicking yet," Mr Warburton said.

Black Earth shares, which are listed in Stockholm, hit an all-time low of SEK8.85 in early deals before recovering to close at SEK9.75, a rise of 4.8% on the day.

Late spring

The group, unveiling a narrowing of 58% to $6.36m in earnings for the January-to-March quarter, did acknowledge some setbacks from weather, which had trimmed by 5,000 hectares to 225,000 hectares expectations for spring seedings.

"We didn't get going [on seedings] at full operational capacity until the end of April due to the conditions," Mr Warburton said.

The company also announced the sale of 9,564 hectares of land in Voronezh at an average of $323 per hectare.

"This was a mix of grass land not suitable for cropping as well as some low quality arable land with high levels of chalk," Mr Warbuton said.