December 18, 2003

 

 

European Union 2004-05 Winter Wheat Area At 14.11 Million Hectares, Up 5%

 

European Union 2004-05 total winter soft wheat plantings are seen to rise 5% on the year to 14.11 million hectares, E.U. grains analyst Strategie Grains said Thursday in its December E.U. supply and demand report.

 

"For the other winter cereals (rye, barley, oats and triticale), plantings are set to be lower than last year," the report said.

 

E.U. rye area in the existing 15 member states is set to fall by 2.6% to 838,000 hectares, while winter barley is estimated at 4.18 million hectares, compared to 4.25 million hectares 2003-04.

 

Winter soft wheat area in the new E.U. member countries is set to increase by 7.3% to 5.45 million hectares, winter barley area by 14% to 500,000 hectares and rye area by 7.1% to 1.83 million hectares.

 

This leaves estimated total winter soft wheat area in the enlarged E.U. with 25 members at 19.56 million hectares, compared to 18.49 million hectares in 2003-04. Total winter barley area is forecast at 4.74 million hectares, unchanged on the year.

 

"In most countries, conditions were good for autumn plantings, although Spain bucked this trend and continuing rainfall for the last two months has hindered planting operations," the report said.

 

Last year, winter cereal area fell sharply on the year due to plants being damaged or destroyed by harsh winter weather, with production being transferred to spring crops.

 

For the current marketing year, Strategie Grains cut its soft wheat production estimate by 500,000 metric tons, due to a reduction in U.K. soft wheat output, so that now E.U. wheat production stands at 82.5 million tons, down 12% on the year.

 

DOWNWARD REVISION FOR 2003-04 CEREALS PRODUCTION

 

For the current marketing year (2003-04), Strategie Grains adjusted its estimates of total cereal production to 184.1 million tons, down 12.0% on the year, and down 300,000 tons on the November report.

 

In order to resolve its cereals deficit, the E.U. needs to import four million tons of wheat, including three million tons from North America, more than five million tons of corn and sell at least three million tons of

intervention rye, Strategie Grains said.

 

Of the E.U.'s intervention rye, 2.1 million tons have been made available so far.

 

"The maize (corn) imports are now beginning to get underway, import commitments for corn from the Americas currently total 1.6 million tons," the report said.

 

"Price movements have done most of the necessary work in terms of reducing demand, encouraging imports and enhancing the position of the intervention rye.

 

"The prices of all the cereals therefore have little potential for further increase but pressure will remain since their prices cannot decrease too sharply either," it said.

 

For the current marketing year, Strategie Grains cut its soft wheat production estimate by 500,000 metric tons, due to a reduction in U.K. soft wheat output, so that now E.U. wheat production stands at 82.5 million tons, down 12% on the year.

 

With reductions for this month's report for internal demand and lower E.U. exports, the E.U.'s wheat deficit has contracted to 1.7 million tons.

 

"Although this deficit is greater than the volume of wheat stocks in intervention (1.18 million tons), supply and demand are certainly much closer to balance than was previously the case," the report said.

 

This could begin to exert a downward pressure on E.U. wheat prices, given their current differential of around EUR10/ton over U.S. wheat prices in Southern Europe, it said.

 

Exports of E.U. wheat have almost halved and are now projected to total 5.5 million tons, down from 6.2 million tons estimated last month, and down from 11.5 million tons in 2002-03.

 

E.U. corn production was revised up slightly by 100,000 tons to 30.6 million tons this month, which is down 24% on the year.

 

As for barley production, Strategie Grains left its production estimate unchanged at 46.8 million tons since last month, which is 2.0% down on the year.