EU wheat inventories to reach five-year high

A strong harvest will lift Europe's wheat inventories to their highest in five years, with projected output at 144.5 million tonnes for 2010.

 

EU wheat output currently looks on course to rise by 4.1%, despite a small drop in sowings, reflecting a switch by Hungarian farmers to corn, and Bulgarian and Romanian growers to rapeseed, a report from US officials in Europe said.

 

It could get even closer to the 151 million-tonne record set two years ago, given the growing hopes for French, German and UK crops.

 

In most countries, "favourable conditions last fall were followed by excellent over winter conditions - good snow cover in eastern states and sustained cold conditions elsewhere in the EU - meaning little or no damage to the crop", a report from the USDA's European staff said. "Although the past few weeks have seen dry and windy weather in western and northern Europe, soil moisture is still reported to be generally good."

 

Rising use of wheat as an animal feed, and for processing by bioethanol plants, will mop up some of the extra supply.

 

Indeed, with one bioethanol plant opening in the north of England last year, and another on stream for 2011, and with Benelux countries also increasing their capacity, Europe's industrial use of wheat "is forecast to continue to trend upwards for the foreseeable future".

 

Exports will also rise, by one million tonnes to 21 million tonnes, helped by a revival in demand among key North African importers, and expectations – among some forecasters - of weaker crops in Kazakhstan, Russia and Ukraine.

 

"The forecast fall in production volumes in North Africa and the Black Sea are expected to see the EU remaining a significant player on export markets," the briefing said, noting the impact of a weaker euro in boosting trade this spring.

 

"France has reported a strong pace of exports through to end-March. Germany has also reported a good export pace including expectations of up to one million tonnes of sales to South Africa."

 

Nonetheless, the EU will end 2010-11 with wheat supplies of 19.1 million tonnes, the highest for five years defying a global trend which many forecasters believe will see a fall in inventories.