Scorching temperatures and violent storms threaten to damage northern Europe's wheat crop just days before the harvest, pushing London and Paris futures to new contract highs, traders and analysts said on Wednesday.
With mercury levels set to reach around 35 degrees Celsius in northern France and southern Britain on Wednesday and storms to follow on Thursday, analysts are rapidly revising downwards their forecasts for the harvest in northern Europe. French analyst Strategie Grains has successively cut its forecasts - in the latest monthly report issued last week, it downgraded the EU-25 soft wheat crop to 115.7 million tonnes from 118 million tonnes a month earlier.
France and Germany were the main countries affected. The latest bout of hot weather means further revisions are likely although the harvest in southern Europe has already finished.
"We're working on new figures now and the tendency is lower. It's hot in France, UK and Germany," the analyst told Reuters.
Wheat futures on both sides of the Channel hit fresh highs on Wednesday. The benchmark November future in Paris reached 127.00 euros a tonne in early trade, up 1.50 euro on the previous close - taking the rally since the start of July to more than 10 euros. "The market has been rising as other origins are not cheaper. But there'll come a time when these can start to compete," said analyst James Dunsterville of Agrinews in Geneva.
In France, the harvesters have been rolling northwards and are now just about to enter the key wheat belt north of Paris. Traders said they expected harvesting to begin there as soon as this weekend.
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