July 30, 2007


Drought destroys two thirds of Hungary's 2007 corn crop



Extreme heat and drought have destroyed almost two thirds of Hungary's 2007 corn crop and the harvest is expected to be between 3 million and 4 million metric tonnes, possibly boosting inflation, Jozsef Vancsura, chairman of the Hungarian Wheat Association, said Friday (July 27).


"If there's no sudden rain or further drought, this year's corn crop could be 3 (million)-4 million tonnes, much lower than the association's expected corn crop of 8 million tonnes for this year," Vancsura said.


In recent years, Hungary's corn crop has totalled between 8 million and 9 million tonnes.


"We are in a full-blown crisis situation. Where the rain fell, the harvest was acceptable, but where it didn't, it was a catastrophe. For us growers, this harvest is a catastrophe that could affect the entire Hungarian society," Vancsura said.


Earlier this week, the local press said Hungary plans to repurchase 1 million tonnes of corn from European Union intervention stock at a price of EUR150 (US$204.36)  a tonne, to resell it to Hungarian animal breeders in the wake of an expected poor corn crop. Hungary needs some 4 million to 5 million tonnes of corn a year to feed its livestock.


The association will assess the full impact of the crop shortfall and may need to request EU intervention, Vancsura said.


As livestock breeders are among the largest consumers of Hungarian grain, the crop shortfall and subsequent rise in grain prices will have significant repercussions on Hungarian meat and other foodstuff prices, Vancsura said.


"This isn't only a problem of the grain farmers; Hungarian consumers will feel the price increases," he said.


Hungary's Livestock and Meat Product Council, or VHT, confirmed the worries to the Hungarian state news agency MTI.


A drastic rise expected in feed prices could boost livestock hog prices significantly above the current 290 forints (US$1.57) per kilogramme by the autumn, affecting all players along the product line - the breeder, the processor and probably the wholesalers and retailers as well, a VHT secretary told the agency.


Since feed accounts for 60 to 65 percent of the costs of pig breeding, it seems inevitable the rising costs will be passed on to the consumers, the VHT representative said.


Hungary's wheat crop also suffered from severe whether conditions this harvest, registering at 3.7 million tonnes, with farmers taking 20 to 40 percent in crop losses. The harvested wheat quality, however, was excellent, Vancsura said.


Hungary will still be able to meet its domestic demand of 2.5 million tonnes for wheat, and be able to export about 1 million tonnes.


Smaller harvests and higher demand for bioethanol projects have boosted global grain prices, over which Hungarian growers have little influence, Vancsura added.


Hungarian corn has reached 50,000 forints (US$271) a tonne on the Budapest Commodities Exchange, one of the highest prices there ever for corn, and compared with HUF50,430 in France.


Rapeseed, which registered around 450,000 tonnes of harvest across 223,000 hectares, Vancsura said. That is slightly down from the 486,963 ton figure released earlier this week by Hungary's Central Statistics Office.


The sunflower seed crop produced a weak to midlevel crop, with less harvested especially in weak soil areas planted late, Vancsura said. The sunflower harvest will total about 750,000 tonnes as against earlier expectations for a crop of over 1 million tonnes, Vancsura said.


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