European wheat yields are threatened by dry weather in many key growing regions, with only a few weeks left to salvage crop prospects, the European Commission warned, as front-month Paris wheat futures rose despite the soaring euro.
"In most regions of Europe, continued mild weather conditions have been very favourable for winter crop growth and spring sowing activities," the Commission said in its latest crop report.
But it noted that more rain is needed in several important crop-production areas to sustain good yields.
"Sparse rain fall was registered in northern Spain, north-eastern France, the southern United Kingdom, Belgium, Luxembourg, and western Germany," the Commission said.
And current weather forecasts point to continued dry weather in most of these regions until the end of the month, although eastern Spain could enjoy abundant precipitation in late April.
In France, the bloc's largest wheat grower, crop conditions are generally good, the Commission said, but it warned that given the dry weather so far, rainfall in the coming weeks will be crucial.
"If there is sufficient rainfall, the outlook will be positive, but may turn negative if dry conditions persist."
"No significant rains are forecasted for the coming week and persisting low temperatures will not relieve the producers," noted French consultancy Agritel on Monday.
And FranceAgrimer, the government crop agency, lowered its wheat rating to 85% good-or-excellent, down four points week-on-week.
But prices in Paris remain under pressure from heavy global supplies and a sluggish Chicago market, as well as the rebound in the euro following the news that centrist politician Emmanual Macron now looks very likely to take the French presidency in the second round of voting next month.
"The hydric deficit in France, as well as low temperatures, have not so far provoked the adding of a risk premium for the possibility of lower production," Agritel noted.
Still, the front-month prices managed to rise on Monday, up 0.9% at E164.00 in afternoon deals, although later-dated new crop contracts were down on the day.
By William Clarke