LONDON: New crop wheat prices in the European Union rose to the highest level in around nine months on Monday as forecasts for further dry, warm weather heightened drought concerns.
Dry, warm weather was forecast to continue until next weekend, reinforcing a lack of moisture and potentially affecting crops recovering from a severe cold spell at the start of February.
"There is also growing concern about dry weather, with Germany forecast to remain dry up to Friday," one trader in Germany said. "Dryness damage is still feared rather than seen."
New crop November milling wheat futures in Paris were up 3.00 euros or 1.5 percent at 207.50 euros to trade at nine-month highs, just shy of key resistance at 208 euros.
"Crops have been stressed by frost and a bit of water would have been welcome during the resumption of growth, even if we're not at a critical stage," a futures dealer said.
"The market is being driven up by worries about winter damage to grain crops in Germany, France and Poland," one German trader said. "In Germany and Poland this remains rumour only rather than on the basis of new estimates from major market players."
The German Farming Association had on Wednesday warned the country's crop will suffer significant winterkill this year.
Frosts of minus 20 degrees Celsius were recorded in some German grain belts in late January and early February. Some wheat and barley areas without enough snow cover will have to be reseeded, the farmers' association said.
Old crop futures in Paris were also higher.
May milling wheat breached a key resistance level at 216.50 euros, which has held over the past month, to trade as high as 217.50 euros, a level last seen on Aug. 29. Paris futures were also underpinned by the French cash market, where traders said German millers were buying in eastern France to cover short-term needs.
Standard quality milling wheat for March delivery in Hamburg was offered unchanged but well over Paris at 223 euros a tonne with buyers at around 220 euros.
New crop milling wheat for September delivery in Hamburg was offered for sale at up one euro at 211 euros at tonne with buyers around 210 euros, also holding well over Paris.
Gains in Chicago led by six-month highs for soybeans also provided support for European prices.
Feed wheat was again quoted above milling wheat in parts of Germany, repeating the pattern seen in past weeks. * Feed wheat for nearby delivery in the South Oldenburg market near the Netherlands was offered for sale above milling wheat at 228 euros a tonne with buyers at around 226 euros.
"Demand for feed wheat just keeps coming and coming," the first trader said. "Exports of feed grains from Russia and Ukraine are lower than had been expected and consumers and dealers are buying again this week."
"Milling wheat is being sold as feed in parts of the country where the transport costs allow, this is supporting milling wheat prices."May feed wheat in London rose 2.50 pounds or 1.45 percent to 175.00 pounds a tonne.
Spanish physical wheat posted mild gains due to similar rises in Paris and Chicago making imports on which the country depends more expensive.
Volume was thin as dealers awaited the arrival of Black Sea wheat ahead of a deadline for executing special EU licences later this week.
Dealers were also relucatnt to take positions before assessing the extent of crop damage from a persistent drought.
"As is usual when there is serious talk of a drought, it has rained a bit, albeit with intensity varying by region and with more rain needed over all," a report from the Mercolleida agricultural exchange said.
"However, it has at least been useful for making some farmers think again about planting maize."
Prompt imported feed wheat in principal grains port Tarragona was quoted at 228-229 euros/tonne , ex-store, up 1-2 euros from last Wednesday.
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