French drought could push up global wheat prices
Speaking at a press conference with reporters last week, Le Maire said it is not possible to know the loss of yield at this stage, but “we already know there will be a loss”. France is Western Europe’s largest producer of soft wheat, a high-starch, low-protein variety used in pastries and snack foods.
The extent of wheat yield lost to the drought will be determined by the weather in the coming weeks, Le Maire said, after the French meteorological service, France Météo, reported that the 2011 spring has been the warmest and driest in 50 years – more so than in 1976, which was previously the most severe spring drought on record.
“The situation is serious for French farmers,” he said, announcing that the government would provide several hundred million euros in aid for those whose crops have been hardest hit by the drought. Soft wheat is also used in livestock feed, and livestock farmers have also felt the impact of lower yields, he said.
Wheat prices have been particularly volatile in recent months and the benchmark wheat price rose to a high of €242 a tonne last week, although this is still short of the three-year peak of €281 per tonne reached in February.
In its latest agricultural commodity market report, Rabobank said that Russia’s announcement that it will end its wheat export ban on July 1 could help to ease the supply situation.
“We expect wheat prices will continue to be pressured in the short term as the market digests the end to Russia’s export ban,” it said. “However, without a significant improvement to weather in multiple production regions, the correction will likely be short-lived.”