July 14, 2011

 

EU wheat forecast increases after rain

 

 

French analyst Strategie Grains on Thursday (Jul 14) increased drastically its outlook for soft wheat production in the EU following last month's rain that restored crops scorched by a spring drought in the west of the bloc.

 

The analyst increased its estimate of 2011 soft wheat production in the EU by 4.6 million tonnes to 130.2 million tonnes, now up 2% on last year's harvest.

 

The revision partly reversed a cut of almost 10 million tonnes in its soft wheat crop forecast over the two previous months when it factored in the drought in western Europe.

 

France, Germany and the UK, the EU's top three producers, accounted for 3.3 million tonnes of the increase in Strategie Grains' wheat forecast this month.

 

"In these countries, harvest outcomes are now set to be much better than had seemed possible a month ago," the analyst said in a report. "The rain was very beneficial for grain filling in the north of France, the UK and Germany."    

 

Other analysts have also raised their wheat crop outlook after June's rainfall, although some are now concerned about excessive moisture affecting crops in France and Germany, as well as persisting dryness in parts of the UK.

 

The improved outlook in western countries was coupled with continued favourable crop growth in the southeast EU, for which Strategie Grains raised its wheat estimate by 800,000 tonnes.

 

"In the southeast (Romania and Bulgaria), weather conditions have been extremely favourable for crop development throughout this year's entire growth season; these good conditions continued through June and yields are set to be particularly high," the analyst said.

 

The revised crop estimate led Strategie Grains to raise by 3.2 million tonnes its forecast for EU soft wheat exports this season to 16.1 million tonnes, although this was still down on a revised estimate of 19.1 million tonnes for 2010/11 exports.

 

The analyst continued to see EU wheat prices supported by a relatively tight world grain market, despite some short-term pressure as Black Sea countries step up exports after lifting restrictions imposed in the wake of a drought in 2010.

 

"Even though EU prices may be subject to downward pressure from the Black Sea countries through the summer and even autumn, they retain an increase potential because US and world stocks are forecast so low," it said.

 

"Except for the possibility of sharp financial downturn, few factors exist that could have a downward impact on wheat prices."

 

The analyst also raised its forecast for EU barley output this year, adding 700,000 tonnes to 52.9 million tonnes, putting it virtually in line with last year's crop of 53.2 million.

 

Western countries again represented the bulk of the increase, with a one million-tonne gain that was partly offset by a 300,000-tonne cut for Baltic countries.

 

It increased its corn-grain crop forecast by 1.2 million tonnes to 60.2 million, now up 9% on 2010 output. The revision included a 600,000-tonne rise for the west EU and a 500,000-tonne gain for Romania and Bulgaria combined.

 

"The wet weather in June was very conducive to corn grain development in all the European countries," it said.

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