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Monday, 02 August 2010

Europe heat wave sparks surge in grain prices

Surging European grain prices following a scorching heat wave in recent weeks are likely to raise flour prices, and farmers are facing higher bills for animal feed, industry executives and analysts said. But some analysts say they doubt whether recent price rises are sustainable in view of large global grain stocks and the fact that overall grain supplies are currently still satisfactory.European grain prices have jumped around 25% in the past three weeks as hot weather and drought have hit crops just before harvesting in Western and Eastern Europe. Key Paris wheat prices were around 178 euros a tonne on Friday.
Europe's fields 'looking like Africa'
The heat wave has stalled grass growth, Campbell-Gibbons said. Yields on a first grass cut to make grass silage to feed to dairy cows were down 20 to 30% in early June and were down as much as 50% on a second cut in late June."The heat wave has left a lot of fields looking more like Africa rather than European meadows," one grain trader said. Hot weather has also meant cows had spent more time indoors, increasing the amount of straw needed for bedding. Campbell-Gibbons said British straw prices had risen to up to 100 pounds a tonne from about 60 pounds last year. She said farmers estimated the total increase in costs at about 1.0 to 1.5 pence per litre of milk.
France has authorised farmers to use set-aside land to feed animals to compensate for a drop in animal feed output after the heat wave in the country in past weeks. Under the set-aside scheme, the EU pays farmers to leave land idle and not grow subsidised crops. France has given permission for the set-aside land to be used because of looming feed shortages. But the picture is better in sun-drenched Spain, where farmers are not concerned about current hot weather, which they say is not unusual for the time and comes after cereals and other similar crops have finished ripening.

Source: Euractiv