U.S. farmers, the biggest wheat shippers, are poised to lose their advantage over French growers in export markets after the worst Midwest drought in more than a decade wilted grain crops and drove prices to a 10-month high.
French wheat costs are near their highest in three years compared with U.S. grain and the premium is likely to rise as record food prices stoke demand from governments in North Africa seeking to end growing protests.
Wheat rose for a second day in Chicago on speculation dry weather may have hurt crops in France, Germany and the U.K., the largest European producers. Corn and soybeans gained amid planting delays in the U.S.
Russia will have little grain left to export in November and wheat prices already reflect the lack of supply, according to Alexandre Marie, a wheat analyst at Bourges, France-based farm adviser Offre & Demande Agricole.
European Union soft-wheat production is forecast to climb 4.2 percent, grain industry association Coceral said, lifting its outlook on higher estimates for Spain and Black Sea region growers including Romania.
Wheat in Chicago fell, headed for the biggest monthly loss since February, after Japan suspended imports from the U.S., where the government discovered an unapproved, genetically modified strain growing in an Oregon field.
Paris wheat futures may halt a two- week decline at a level of 245 euros ($324) a metric ton after falling below a support level of 255 euros three days ago, according to technical analysis by Cedric Weber, an analyst at France’s Offre & Demande Agricole.