August 12, 2011

 

Strategie Grains trims EU soft wheat yield forecast

 

 

Strategie Grains cut its estimate of EU's soft wheat output, and said that good weather was crucial to protecting quality too, despite of growing fears for the impact of harvest rains.

 

The analysis group cut by 300,000 tonnes to 129.9 million tonnes its forecast for the world's biggest wheat crop, citing a reduction to 23.1 million hectares in its area estimate, reflecting downgrades to figures for France, Germany, Italy and Poland.

 

And, on quality, while the southern European harvest has proved satisfactory, "the definitive quality of this year's harvest will heavily depend on weather conditions in the coming weeks in the more northerly countries".

 

"Rain has effectively disrupted the harvests in parts of central Europe - Germany, Poland, the Czech Republic and Slovakia - and the harvest began a week later than normal in the UK," the Paris-based group said.

 

Concerns have centred on Germany, the EU's second-ranked wheat importer, which usually produces a high-grade crop, but which last year too saw quality reduced by a rain-disrupted harvest.

 

Damp conditions encourage sprouting, which reduces levels of starch and, in particular, of the important gluten protein.

 

"In central Europe, focus remains squarely on Germany and as each day passes, the quality question grows one drop of rain at a time," Jaime Nolan at FCStone's Dublin office said.

 

Indeed, with Saudi Arabia in the market for 660,000 tonnes of wheat, besides buying interest from Algeria and Tunisia, it "will be interesting to see what level of German interest is shown in this tender under an environment of continuing quality uncertainty in Germany".

 

Strategie Grains report, which comes ahead of an influential US Department of Agriculture Wasde crop report due at 12:30 GMT, also lifted by 500,000 tonnes to a bumper 60.7 million tonnes the forecast for the EU corn crop, reflecting better hopes for French and Romanian harvests.

 

"Our estimates for corn production retain a potential for additional increase in the event that weather conditions continue to be ideal for corn through the final weeks of the growth cycle," the group added.

 

And it trimmed by 200,000 tonnes, to 52.7 million tonnes, the estimate for the barley harvest, although the amount of the grain deemed fit for malting was raised by 300,000 tonnes to 10.6 million tonnes.

 

In the Wasde report, analysts are focused on the potential for a downgrade to the US spring wheat estimate, following an overly wet spring and a July heatwave.

 

The average estimate is for a reduction of 10 million bushels, to 541 million bushels, in the harvest of spring wheat other, excluding the durum variety used to make pasta, representing a 75 million-bushel drop year on year.

 

Separately, the UK farm office estimated the country's wheat plantings for the current harvest at 1.82 million hectares, some 20,000 hectares more than in an official estimate last month.