May 31, 2012


EU wheat worries shift to Germany, Hungary



According to EU authorities, Germany and Hungary have become the focuses of concern over the region's wheat and corn harvest due to dryness, thereby resulting in slashed estimates.


Rains had come soon enough to rescue crops in central and northern Spain, France and the UK, "removing concerns" which had seen these countries previously raised the epicentre of regional crop concerns.


"Beneficial rainfall was also received in Morocco, partially mitigating the effects of the previous dry period," the European Commission's Mars farm forecasting said.


The unit raised forecast for average wheat yields in France, the EU's top producer, to 7.19 tonnes per hectare, well above average levels, and in the UK to 8.18 tonnes per hectare.


However, recent rains had been insufficient to make up for earlier drought in Hungary, leaving the country with a rainfall deficit of some 80mm, the commission said.


While soil moisture levels appeared on the surface "satisfactory this image is illusory, because the lower soil layers are dry".


In Germany, the EU's second-ranked wheat producer, "soil moisture values throughout the countries are below the long term average with the exception of Hessen and Saarland".


"Rain is now needed to maintain the potential" for a yield even at a level downgraded by 0.2 tonnes per hectare to 7.26 tonnes per hectare, Mars said, adding that rain was needed in parts of Poland and Slovakia too.


The comments follow a forecast last week from Toepfer International, the German-based grain trading house, that the domestic wheat crop could fall to 21.4 million tonnes, from 22.7 million tonnes in 2011, thanks to dryness in the east and a February cold snap.


Germany's farm ministry, warning of "winter weather damage", forecast a 9.5% drop, to 2.87 million hectares, in the country's winter wheat area which makes it to harvest.


On Tuesday, broker FCStone said that Germany was "not faring so well when compared to France".


"In the north east precipitation levels still remain very low. North western Germany needs rain, and the window is fast closing for conditions to help sustain current yield estimates for the region," FCStone commodity risk manager Jaime Nolan Miralles said.


Separately, the commission's agriculture directorate reduced its estimate for the EU soft wheat harvest to 126.5 million tonnes, down some five million tonnes on the previous figure, but above forecasts from some other observers.


Strategie Grains estimates the crop at 122.7 million tonnes.


Mars also nudged higher to 4.43 tonnes per hectare its forecast for the average EU barley yield, with an upgrade to spring crop hopes more than offsetting reduced expectations for winter barley.


The estimate for the rapeseed yield was kept at just under 2.9 tonnes per hectare.

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