June 17, 2011

 

EU grain production: Forecast revised lower on renewed dry conditions 

 

 

With renewed dry conditions in the Western part of the EU in May, French analyst Strategie Grains on Thursday (Jun 16) sharply cut its forecast for this year's grains crops in the bloc.

 

Soft wheat saw the largest reduction, at six million tonnes, with the estimate of the 2011 crop lowered to 125.6 million tonnes, now 1% below last year's 126.6 million tonnes.

 

"The springtime drought continued throughout May in West Europe, reaching critical levels in many countries," Strategie Grains wrote in its monthly report.

 

"Rains arrived at the beginning of June, but in most places this was too late to fundamentally alter harvest outlooks, since yield potentials were already irrevocably impacted in France, Britain and Germany," it added.

 

However, a cut of almost seven million tonnes to the wheat crop outlook in the west EU was partially offset by a one million tonne increase in the forecast for southeast countries and a 400,000 tonne upward revision for Mediterranean countries, it said.

 

Strategie Grains has now cut its outlook for the total EU soft wheat crop by nearly 10 million tonnes in the past two months. The analyst had previously anticipated a rise of as much as 7% in soft wheat output.

 

The new reduction to its crop estimate led Strategie Grains to slash by four million tonnes its forecast for EU soft wheat exports next season to 12.9 million tonnes, down six million tonnes on 2010/2011.

 

"The drastic reduction in projected EU export availability seems now unavoidable given the sharp reduction of EU wheat supply," the analyst said.

 

EU wheat stocks would remain relatively tight, with little prospect for growth, which could support prices in the medium term even if they may weaken when Black Sea countries return to export markets this summer after being absent this season due to drought-hit 2010 crops, Strategie Grains said.

 

Strategie Grains kept its corn crop forecast nearly unchanged, down 100,000 tonnes to 59.0 million, still up 8% on 2010 output.

 

In total, it put the EU's 2011 cereals harvest at 275.7 million tonnes, down nine million tonnes from last month but still 0.6% above 2010.