Wheat prices posted hung on to early gains on Monday as Russia reported a further decline in yields from its grain harvest, while Jordan and Tunisia orders revealed continuing interest from importers.

Russia's deputy agriculture minister, Alexander Petrikov, said that the country had harvested 40.3m tonnes of grain by bunker weight as of August 19, 38% less than a year ago. Bunker weight is typically about 7-8% higher than the clean weight used

The average yield fell to 2.08 tonnes per hectare, showing a marginal decline on data even from data reported up to August 18, and down 23% on the result a year before.

At 19.3m hectares, Russian farmers have harvested nearly half of the sown area, although many crops are expected to be abandoned after the country's worst drought on record, which is still seeing only sporadic relief in a period when autumn planting ususually begins in earnest.

Dry soil

Showers gave farms, at best, 0.6 inches of rain at the weekend, Meteorlogix said, adding that rain would remain sporadic for the rest of the week.

"Major drought continues to impact spring grains," the weather bureau said.

US broker Benson Quinn Commodities said: "Dry weather remains a concern in Russia as they remain dry for this week, although half of the wheat growing area is forecasted to receive rain in extended six-to-10 day maps."

Prices weakened a week ago on forecasts that Russia's drought was about to break, raising prospects for autumn grain sowings, which the government expects to fall by one-third because of the poor soil conditions.

Fears are resurfacing about dry conditions for US autumn sowings too, followng a dearth of rain in south eastern parts, which has also raised a question mark over regional soybean crops.

"There are fears around about the hard red winter plantings," a London analyst told Agrimoney.com.

Import orders 

Chicago wheat for September delivery closed up 2.0% to $6.92 ¼ a bushel, with the better-traded December lot up 1.9% at $7.25 ½ a bushel.

And European grains had extra boosts from import deals. Traders said that Tunisia bought 50,000 tonnes of milling wheat - believed to be from France - at $313.74 a tonne, including freight, and 50,000 tonnes of feed barley, at $282.14 a tonne, also including transport costs.

Jordan bought 100,000 tonnes of German wheat at $337 a tonne.

Paris milling wheat for November closed 2.2% to E214.25 a tonne, although its London feed wheat equivalent gained only 0.2% to finish at £149.95 a tonne.

Food vs feed

Indeed, poor harvesting conditions in Europe are, in raising the prospects of milling wheat crops being downgraded to feed, seen by many analysts as likely to improve premiums for food grain over feed supplies.

Indeed, Gleadell, the UK grain merchant, on Monday urged farmers to separate grain harvested in an early window of good weather from later-reaped crop, which was likely to be of lower quality.

"Keep your quality wheat separate. It could get good premiums later this season," Gleadell said.