Paris wheat hits one-year highs on Black Sea crop outlook

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European wheat futures climbed to their highest in more than a year on Monday as worries grew over Black Sea supplies after reduced harvest estimates for Russia and Ukraine and weather forecasts showing persisting dry weather.

September wheat, the most active position on Paris-based Euronext, was up 2.2% at 267.00 euros ($289.94) per metric ton by 1145 GMT.

It earlier rose to 267.50 euros, a 15-month peak for the contract and highest front-month price BL2c1 since last March last year.

The contract has risen nearly 18% in May.

A lack of rain and late frosts are thought to have hurt crops in Russia, the world’s biggest wheat exporter, leading observers to cut projections for this year’s harvest.

IKAR has downgraded its wheat production forecast from 83.5 million tons to 81.5 million tons after bitter frosts, it said on Monday.

Russia’s Grain Union, meanwhile, said that 1.5 million hectares of crops in Russia have been damaged by frosts and the total figure could rise to 2 million hectares.

In Ukraine, grain traders union UGA made a downward revision to its forecast for the combined grain and oilseed harvest this year, reflecting reduced planting and a dry May in part of the country.

The deteriorating outlook in the Black Sea region has also focused attention on mixed conditions in other export zones, including the European Union, where top producer France is being dogged by persistent rain.

“The weather market is still on the agenda,” the Argus consultancy said in a note. “Excessive humidity persists over much of Western Europe while dry conditions prevail in Russia and Ukraine.”

Weather charts continued to show little rain in the coming days for much of southern Russia, with rising temperatures potentially exacerbating dryness.

“Today people are pricing in the absence of rain and a Russian crop more like 80 million tons,” one European trader said.

Chicago wheat futures, a global benchmark, are closed on Monday for the U.S. Memorial Day holiday, shifting the trading focus towards Euronext.

Chicago wheat hit a 10-month high last week and chalked up a 7% weekly gain.

Source: Reuters