EUROPEAN grain production is expected to be well down on average as many parts of northern and central Europe experience some of their hottest and driest conditions on record.
Ancient rock carvings on the Elbe River in the Czech Republic, only exposed during the most severe droughts, are current in full view and a number of countries have implemented drastic drought support packages for their farmers.
Germany made a $422 million emergency pledge to help its farmers while Sweden has given its agriculture sector $192 million following the most prolonged heatwave on record.
The list of woe inspired by the dry and heat is lengthy but the worst impacted areas are in places such as central Europe and the Baltic States.
Parts of Austria have recorded just 15 per cent of their average rainfall for the year so far, while the grain bowl of Hungary is also facing a poor season.
It is not all smiles on the western half of the continent, in spite of some modest rainfall in the past fortnight.
French farmers have been feeding hay since June, during a period where there is traditionally ample feed in paddocks.
On the Iberian Peninsula, temperatures in places such as Lisbon in Portugal and Zaragoza, in Spain, soared to Australian-like levels in the mid-40s.
The hot and dry conditions mean European grain production will be well down.
Looking further ahead, it also means demand for feed grain and hay will soar, with farmers already wondering what feed stocks will be available for winter, when feed demand is at its highest.
Commonwealth Bank commodity analyst Tobin Gorey said the major implication for Australian grain growers could be that countries that normally looked to the EU to provide grain if they could not get supplies from the Black Sea may have to cast the net further afield.
“There certainly won’t be an aggressive European offering of grain for sale like we see some years,” Mr Gorey said.
“It will keep international competition for grain higher, even though a lot of Australia’s focus will be on supplying the domestic market given the low production likely this year,” Mr Gorey said.
“We’ve seen European futures spike during this drought period, the US is probably the only major exporter left with good supplies at present.”
In further supportive news for world grain prices Mr Gorey said the Argentine government was looking at putting in export taxes on wheat once again.
This is not in order to minimise exports to regulate domestic prices, as the Russian and Ukrainian governments are rumoured to be considering, but simply to raise revenue.
The crisis-hit Argentine economy is once again in trouble and the government is frantically trying to balance the books.