Wheat prices hit new highs in Europe as impact of drought is felt

In Europe, the price of wheat rose to a record $370.55 per metric ton, putting pressure on European ethanol profitability. Wheat-producing areas of Europe experienced drought in the spring and heavy rains during the summer, while heat and drought hit hard in Eastern European wheat growing areas such as the Ukraine.

Biofuels critics have cited the impact of biofuels production for the rise in wheat prices. The shortage in European wheat is expected to have a positive impact on global wheat prices. Although wheat is only extensively used for ethanol production in Europe, higher wheat production in the US, Australia and other markets such as Brazil and Argentina could reduce available acreage for ethanol feedstocks such as maize.

Europe has traditionally lagged in ethanol production, but leads globally in production of biodiesel.

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