Wheat prices soared again amid talk that drought poses a threat to wheat crops not just in the US but in Australia too, provoking a "historically high drought premium" to prices, with dryness fears also spreading from Ukraine into Europe.
Wheat soared above $7 a bushel in Chicago for the first time since October, making decent gains in Paris and London too.
Wheat prices as of Wednesday's
Chicago: $7.15 ¾ a bushel, (+3.4%)
Kansas City: $7.88 ¾ a bushel, (+3.3%)
Minneapolis: $7.61 a bushel, (+2.6%)
Paris: E213.25 a tonne, (+2.2%)
London: £169.95 a tonne, (+1.2%)
Values for May contracts
Growers need six inches of rain to plant, an amount that would be "unseasonal", New South Wales Farmers warned, adding that "stress levels are rising" among producers.
A lack of rainfall in eastern Australia would also be consistent with an El Nino weather pattern, over which meteorologists have assigned an increasing probability.
The rainfall deficit so far this year in Queensland and New South Wales, between them typically responsible for more than one-third of national wheat output, has hit 234mm (9 inches) so far Toowoomba in the Darling Downs, excessing 100mm in many other parts, according to CliMate.
These shortfalls, "combined with a hot summer and high evaporation rates clearly support the comments we are hearing from producers that they need in the order of 6 inches (150mm) of rain – and soon - in order to plant a viable crop", grain trader Pentag Nidera said.
The cautions come amid mounting concerns over dryness in the US, where ratings for the southern Plains crop was downgraded this week again, including in Kansas, the country's top wheat-producing state.
At Chicago broker RJ O'Brien, Richard Feltes said that "weather leans positive [for prices] with confirmation today of much below normal temps penetrating into southern US next week while majority of the US hard red winter wheat belt leans dry".
Furthermore, there are continued concerns over dryness in Ukraine, which RMI Analytics, the malting barley consultancy, said appeared to be a bigger threat to the 2014 harvest than that of the country's crisis denting spring sowings.
"Dry conditions seem to be a more severe threat to the crops and will have to be closely watched as some regions report having received only up to 50% of the normal average precipitation in the last three months," RMI said.
Separately, Agritel said that "during the last six months, only 50% of the normal level of precipitations has been registered in the European part of the Black Sea basin".
"Significant rains are not forecasted for the following days, ensuring good conditions for sowings to advance but increasing fears concerning low soil moisture levels," the analysis group said.
The dryness fears have spread further west into Europe too, with RMI cautioning that "both in France and in Germany timely rains are needed now as the soil conditions are a bit dry after this winter".
Gail Martell at Martell Crop Projections said that the "most serious drought is in Bayern, southern Germany, where winter rainfall was less than 50% of average.
"Troublesome drought has continued in March," and indeed "seems to be spreading into Poland another important wheat-producing country", the third ranked in the European Union in grains output overall.
One European commentator told Agrimoney.com that "Central Europe could definitely do with a bit more rain once plantings are over", with the Czech Republic seeing just 44% of normal rainfall.
In Australia, the lack of rainfall has injected a "drought premium" into prices being offered in the Darling Downs, an important feedlot area, Pentag Nidera said, with new crop APW wheat in Brisbane, at Aus$324 a tonne, trading at a premium of Aus$30 a tonne to the South Australia export market.
"Despite these historically high forward prices in southern Queensland, the phones ain't exactly ringing off the hook - hardly surprising given the massive rainfall deficits," the broker said.
"The collective ag sector in northern New South Wales and Queensland is starting to sweat on rain as the winter crop planting window looms under warm, dry autumn skies."
Already the dryness had meant prospects for sorghum production "deteriorating toward 1.2m tonnes", down from Pentag's forecast of 1.3m tonnes last month.
The US Department of Agriculture last week slashed its forecast for the Australian sorghum crop by 700,000 tonnes to 1.2m tonnes, warning that a "severe lack of summer rainfall delayed planting in many growing areas and reduced potential yield.
"In addition, record high temperatures further stressed the crop already struggling with a lack of soil moisture."
Australia's official Abares commodities bureau, which last month cut its forecast for the sorghum harvest to 1.28m tonnes, pegs last year's harvest at 1.44m tonnes.