EU wheat prices rises due to dryness in Ukraine and Russia

According to the Ukrainian agricultural ministry, almost 26% of the grain acreage has been planted, 100,000 hectares less than the 2 million hectares that had already been sown by this time last year. 56% of the acreage (9.6 million hectares) has been planted in Russia, which is 380,000 hectares less than last year. 

The planted fields are too dry for the most part, which could reduce crop yields. As a Ukrainian meteorological service reports, this year saw the driest August in 54 years, and no rain is expected before the end of September. 

European wheat traded in Paris increased by 1.9% in price to just shy of €175 per ton yesterday and closed at almost a one-month high. Dry weather in Russia and Ukraine were responsible for the price surge. Planting of next season's crop is currently underway in the Black Sea region, one of Europe's largest wheat exporting areas. 

The European wheat price has also been lent support by the US wheat price traded in Chicago, which gained by 2.4% to 507.5 US cents per bushel yesterday, likewise closing at nearly a one-month high. 

"The reason for the price increase are fears that frost could hamper the Australian winter wheat crop, though it remains to be seen just how badly the crop will really have been hit by the frost", says Commerzbank.