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The frosts in February are thought to have had a bigger impact on wheat crops in Germany than originally thought with harvest expectations scaled back by 2.7m tonnes. Farmers are said to be ploughing in crops affected by the low temperatures. Spain too has downgraded harvest expectations on the back of a continuing drought but this mainly concerns their durum wheat production and they are now expecting to become a net importer of this grain for the first time in decades.

Last week Analyst Strategie Grains cut its forecasts again for winter grain crops in the European Union this year due to the impact of both frost and drought, putting projected soft wheat output below last year's drought-affected crop.

Meanwhile Russia has leapt back into the frame with suggestions that they might export another 2 million tons of wheat in the coming three months. Russia is claiming that its agriculture sector has completely revived after the drought of 2010. However, at the Black Sea Grain conference yesterday one analyst said the wheat harvest in the region is expected to decline by 13 m tonnes to 85 m tonnes.

On the markets yesterday London wheat prices ended up £1.55 for July but new crop prices had fallen slightly, this trend was reversed this morning with a 1% increase in new crop prices. In Paris wheat prices closed yesterday up a percent at 240 euros just short of their two week high of 214.75 euros. Reuters report that improved crop conditions pressured new-crop wheat futures on both sides of the Atlantic, but dealers said Paris prices were underpinned by strong buying interest just below 200 euros on concerns about the next harvest in Europe.

Meanwhile the rain continues to delay fungicide treatments to the UK crop. The forecast for another wet week ahead is good for reducing the drought risk but it is raising concerns that diseases may not be fully controlled with implications for final yield.

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