October 21, 2011

EU's 2011-12 corn yield to reach record high

EU's 2011-12 corn production estimate has been raised to a record high and the bloc's cereal plantings are also expected to increase further in the following crop year, according to Strategie Grains Thursday (Oct 20).

The influential analyst lifted its prediction for this year's EU grains harvest to 282.8 million tonnes, and boosted its forecast for the bloc's corn output by 1.7 million tonnes to an unprecedented 63.4 million tonnes, up 15% on year. World corn output is also seen higher at 861 million tonnes, helped by crops in Russia, China and Ukraine.

Europe's crop is a result of very good yield results obtained in the west EU countries, which have generated increases to our forecasts for France and Italy, and offset worse results in central Europe, Strategie Grains said.

Soft wheat output is also seen a little higher at 129.2 million tonnes, as better-than-expected crops in the UK, France and Romania make up for lower production in Germany, Poland and the Baltic, leaving a 1.8 million tonne surplus over estimated demand. Of the crop, 65% is expected to be of milling quality, up from 54% last year.

In its first estimates for the 2012-13 crop year, Strategie Grains said it expects plantings to increase next season, with a 700,000 hectare increase in cereal plantings to 56.3 million hectares.

"Most of this increase relates to durum wheat, up 10% compared with 2011/12 and spring barley, up 6% compared with 2011/12," said the forecaster.

With more grain available this season, Strategie Grains raised its estimate for Europe's wheat stocks as of July 1 to 11.4 million tonnes, and said it expects inventories in June 2011 to total 12.6 million tonnes.

Despite the increasingly bearish outlook for world wheat markets with higher Black Sea and European production, Strategie Grains said it expects prices to stay supported in the coming months.

"The balance sheet has slackened without the situation becoming too heavy," said the analyst. "In the longer term, EU prices could be supported as the pace of exports from Russia slows."

Corn prices, however, could come under pressure from excess supplies in Ukraine, despite a predicted fall in ending stocks of the grain in 2011-12 to 4.3 million tonnes, Strategie Grains said.