September 16, 2011

 

Analysts revise down EU 2011/12 soft wheat production

 

 

Analysts at France's Strategie Grains on Thursday (Sep 15) dropped 2011/12 forecast for EU soft wheat production after heavy rain affected both the quality and quantity of crops.

 

Strategie Grains expects the EU to produce 129.0 million tonnes of soft wheat, down from the estimate of 129.9 million tonnes the France-based analysts gave in August but still up from the 127 million tonnes harvested in 2010/11.

 

In its monthly report, Strategie Grains also reduced its estimate for milling wheat production in the EU by 3.1 million tonnes to 83.5 million tonnes -- or 65 % of the total soft wheat output -- after heavy rain in August and at the start of September impacted grain quality.

 

It is still much higher than the exceptionally low production of milling wheat of 69 million tonnes or 54% of the total wheat output recorded in 2010/11 after torrential summer rain left the majority of the crop downgraded as animal-feed wheat.

 

Despite the expected rise in EU soft wheat output, the balance between demand and supply should remain tight as the EU internal demand is set to increase to a greater extent than EU supply, Strategie Grains said in its report.

 

"This generates a reduction in export availability to just under 15 million tonnes, compared with 19 million tonnes in 2010/11," said Strategie Grain analysts who also estimate the region's actual exports in 2011/12 at nearly 15 million tonnes.

 

"EU wheat is currently very attractive compared with US wheat. Meanwhile, Black Sea wheat prices have risen incessantly during recent weeks... The French wheat price is now very close to the Russian wheat price," they said.

 

Heavy rain at harvest time also hit barley production, which is now expected to reach 52.5 million tonnes, down from 53.1 million tonnes in 2010/11. This was down from the 52.7 million tonnes Strategie Grains had predicted last month.

 

EU barley exports were seen at 3.4 million tonnes in 2011/12, up from 2.5 million tonnes forecast last month, mainly on the back of higher expected demand from Saudi Arabia.

 

Riyadh said last week it planned to import 7-7.5 million tonnes of barley this year as feed for animals.

 

The summer rain created "near perfect conditions" for the development of corn crops, Strategie Grains said. It raised its EU production forecast by one million tonnes to 61.7 million tonnes, citing increases in France, Italy and Spain.

 

In August Strategie Grains forecasted grain production output at 282 million tonnes but is expecting a total grain production of 281.5 million tonnes in the EU bloc, up from the 274.7 million tonnes recorded in 2010/11.