August 20, 2012

 

 

After drought shrank yield prospects in Italy, the corn crop in France is developing well and could provide a buffer for this year's western European harvest.

 

The good state of corn crops currently in Spain could also offer some relief for European supply of the grain that is widely used in livestock feed.

 

Hot, dry weather in southern and eastern EU countries led analyst Strategie Grains on Thursday (Aug 16) to slice 7.1 million tonnes off its forecast for 2012 grain corn output in the 27-member EU to 58.1 million tonnes.

 

The deteriorated European outlook has added pressure to a world market already reeling from crop losses in the US, the world's biggest corn (corn) producer, where the worst drought in over 50 years has sent prices to record highs.

 

"Corn development has been severely impacted by the hot, dry weather in central and southern Europe," French-based Strategie Grains said. "The damage is irreversible, although an improvement in the weather would provide better conditions for filling the grains that exist."

 

The downgrade to Strategie Grain's EU forecast included a two million-tonne cut to estimated output in Italy, now seen at 7.1 million tonnes and down more than two million on last year's crop.

 

The situation varied considerably but all zones had been negatively affected by extreme heat, the analyst said, estimating 5% of grain corn fields will not be cut because of low yield potential and will be left as fodder corn.

 

In contrast, Strategie Grains raised its outlook for the French corn crop on improved yield prospects, echoing comments by other analysts who say warm weather in August has boosted crops after rain-delayed planting during a cool, damp spring.

 

"To start with we had sowings that weren't in great shape," Paul Gaffet of grains consultancy Offre & Demande Agricole said. "Then we gained some extra area and had good development with ample water reserves and now the return of hot weather."

 

The wet spring and start to summer had benefited both non-irrigated and irrigated fields, with revived water table levels reducing the risk of irrigation limits in summer. Intense heat forecast in France from Friday to Sunday (Aug 17-19), with temperatures in the south western corn belt due to reach the high 30s degrees Celsius, was not a serious threat to crops that have already gone through pollination, Jean-Paul Renoux, corn director at crop institute Arvalis, said.

 

"Corn is a tropical plant and to start worrying you would need to have temperatures of 43 degrees for a whole week."

 

Prolonged heat could curb yields during grain-filling but this would be less damaging during the earlier pollination and grain-formation stages, he added.

 

The farm ministry estimates this year's French crop at 15.4 million tonnes, down slightly from a bumper crop of 15.7 million tonnes in 2011. Strategie Grains, meanwhile, raised its monthly estimate to 16.2 million tonnes from 15.7 million, citing increased yield prospects in the south that could improve further with favourable weather during grain-filling.

 

Good crop progress in Spain may also limit the decline of European corn production this year, with traders saying irrigation helped Spanish corn withstand a drought that affected other harvests such as wheat and barley. Operators said the country is on course to harvest around four million tonnes of corn this year, roughly in line with 2011.

 

"It's been perfect conditions for corn with water and sun," said one trader.

 

Strategie Grains was more cautious, however, saying that despite irrigation drought had affected crops since above-average heat in July increased plants' water needs. The analyst cut its yield forecast for Spain but raised its production forecast by 230,000 tonnes to 3.25 million tonnes as it increased its estimate of the area sown with corn.