September 11, 2010

Nearly 50% of Germany's wheat yield this year will only meet animal feed quality as against about 20% in normal years due to damage brought by rain, traders and analysts said Friday (Sept 11).

"The market is still awaiting precise figures but it looks like we are facing one of the worst-quality harvests since the 1970s. It looks as though Germany's wheat export business will be washed away by the rain," a trader said.

Germany has had excessive rains since the harvest started in late July, adding to a series of worldwide harvest problems.

Global grain prices surged to two-year highs in August as a drought devastated Russia's crop and the country announced a sudden grain export ban. Bad weather has also hit harvests in Ukraine, Canada and Pakistan.

The German Agriculture Ministry estimates winter wheat crop, used for bread-making, is expected to drop 5.3% on-year to 23.58 million tonnes

"A worse problem than the volume drop is the quality damage from the rain. It is now pretty clear that Germany will have a smaller-than-expected bread wheat crop, possibly generating wheat imports. But there will be a large volume of German feed wheat which will be exported," a German analyst said.

Over 95% of Germany's wheat crop has now been gathered but harvesting would normally have been finished about two weeks ago.

"The ground remains too soft for vehicles to drive on in the final areas in the north and east. We just cannot get the work finished and more rain came again this week," a trader said. The last stage of the German wheat crop may be so heavily damaged by almost seven weeks of repeated rain that farmers may not bother harvesting it.

"Part of the final volumes of wheat to be harvested may be such poor quality that it will not be good enough for animal feed or even bioethanol and so basically worthless. There is such heavy sprouting that it may just be ploughed over," one analyst said.