July 15, 2010

EU slashes wheat crop estimates amid bad weather

Poor weather has cost the EU its hopes of raising soft wheat production this year despite a rise in sowings, Strategie Grains has said, slashing its crop estimate by 3.6 million tonnes.

The group said that the region's harvest, which is in its early stages, was now on track to reap 129.5 million tonnes, putting it below last year's 129.8-million-tonne result.

Many analysts had hoped that the EU would at least beat last year's result, thanks to greater plantings. The USDA last week pegged the region's overall wheat harvest coming in more than 3 million tonnes high than 2009's.

The revision is the latest in a series of downgrades to crops from Canada to Western Australia which have lifted prices of worldwide, sending Paris wheat to two-year highs.

Indeed, the grain made further ground on Thursday (July 15), adding 0.3% to EUR167.00 a tonne in early deals in Paris.

Strategie Grains said that its downgrade reflected the polarised weather which has afflicted Europe's northern grain majors, including top-producer France, with dry weather, even as eastern states suffered widespread floods.

The group noted that the end of the growth cycle in Europe coincided with a spell of excessive heat in west Europe and excessive rain in east Europe, causing large reductions to estimated production in both parts of the EU.

France, Germany, the UK and the Benelux countries, which all suffered too little rains, bore the brunt of the downgrade, with hopes cut too for sodden Bulgaria, Hungary and Romania.