German crops focus of EU weather concerns – again

The rains forecast to relieve dryness in much of the European Union look unlikely to alleviate concerns in Germany, which is, for a second successive season, the focus of regional concerns of weather damage to crops.

Many countries have suffered a dearth of rain this year, with much receiving less than one-half normal precipitation over the last month, and a swathe from the southern UK to northern Germany seeing less than one-quarter.

However, "conditions in southern UK are not as concerning as those in Germany", the EU's second-ranked wheat producing country, FCStone analyst Jaime Nolan said.

While rains are expected for many parched areas, notably the UK and north west France, central and northern Germany "remain dry".

"Some precipitation is forecast over the next few days, but more will be needed to alleviate concerns in the market," Mr Nolan said.

'Different trends'

Heightened fears over the dryness have been attributed by many observers to a resilience in European wheat prices to falls in Chicago futures, which set the world pace.

Agritel on Tuesday said the "different trends" reflected "the dry conditions in France and in the northern regions of Europe [that] are still a concern among market operators".

The Paris-based consultancy added: "The situation is not disastrous for now, but the tight fundamentals leave no room for weather adversities on the 2011 harvest."

Mr Nolan said that Germany's weather-affected harvest last year, when heavy summer rains dented the quality of a crop that is normally overwhelmingly of milling grade, "will keep price action very sensitive to developments there near term".

Germany has already suffered downgrades to winter rapeseed expectations, following cold winter weather on fields lacking ?thanks to the dearth of precipitation ?a protective snow covering.

Optimistic outlook?

In the UK, the comments came as many dry areas, including farms around Agrimoney.com's base in Herefordshire, received small amounts of rainfall.

"If the dry spell carries on for another fortnight, it could be quite serious," David Sheppard, managing director at UK grain merchant Gleadell, said.

"We need the rain. But it does look like we are going to get some."

Prospects for winter crops looked positive in the UK, assuming the precipitation does arrive, with farmers using the dry spell for spring fertilizer applications.

"If crops put roots down, find moisture and get nitrogen uptake, things will fly," Mr Sheppard said.