EU are expecting grain harvest of 284 MMT

In 2012, despite challenging weather, EU27 farmers are expecting another sizeable grain harvest of 284 MMT. If realized, this will be on a par with 2011 but still 29 MMT below the record crop harvested in 2008. The low carry in stocks from MY2011/12 and forecast for little year-on-year change in total domestic consumption mean there will be much focus on the crop as it develops over the coming months.

 

With the exception of Hungary, Romania and Bulgaria where dry conditions delayed winter plantings, and Scandinavia which experienced overly wet conditions, meaning the crop in those regions was somewhat underprepared for winter, most of the EU27 experienced excellent planting conditions in the fall of 2011. This was followed by a relatively mild start to winter until a three week period of very cold weather in late January and the first half of February which affected much of the EU27. Snowfall was significant but windblown in places, especially in the east, but limited elsewhere. Neither set of conditions were ideal and caused much concern at the time, especially in France, with some market commentators talking of losses like those experienced in MY2003/4.

 

With the onset of spring, it is now thought the main damage was not as bad as some feared but is still significant in France while Bulgaria, Romania and a number of other Member States experienced above average winter kill. In France, official estimates in early April show that more than half a million hectares of soft wheat, durum wheat and winter barley will have to be resown. To the east, in Germany, Poland, the Czech Republic and Hungary, while winter kill is thought to be above norm, it is still too early to confirm its extent. Bulgaria and Romania saw very heavy snow fall but high winds lead to stark variations in the level of cover provided. The combination of this with extremely cold temperatures has inevitably seen crops damaged. That said, these two countries are used to dealing with winter kill so the concerns are measured. To the south, both Spain and Portugal are reporting drought concerns which will need to be watched (See GAIN Reports SP1204 and SP1209). Elsewhere the outlook is much more positive. While Scandinavia suffered some particularly cold conditions, the crop is reported to have fared reasonably well over winter. In the UK, market commentators are upbeat about the current condition of the crop. Overall, the outlook for the EU27‟s winter crop, mainly wheat but also barley, is generally positive . Further, where damage has occurred, the fields are not expected to be left to produce lower yielding crops. Rather, there will be a marginal increase in spring plantings of barley, corn and sunflowers.

 

It is now a widespread lack of rainfall through March and April which is starting to cause some concern. Crop development and yields are not currently reported as having been affected but rain is certainly needed, not just to improve soil moisture but also to ensure the efficacy of fertilizer applications. As previously alluded to, this is especially the case in the Iberian Peninsula but other countries in the west where snow cover was limited, notably the UK and France, are also very much in need of rain. Consequently, any factors that might have a negative effect on yield or quality are attracting significant attention from the market, not least due to the impact this will have on the EU27‟s exportable grain surplus.

 

Forecast MY2012/13 EU27 grain production exceeds domestic consumption by 8.5 MMT. MY2012/13 is expected to see total feed grain consumption little changed year-on-year but this masks an anticipated shift from wheat to corn, barley and minor crops such as rye, oats and sorghum. An increase is again seen in Food, Seed & Industrial (FSI) use of grain, predominantly due to increased grain use for renewable transportation fuels. Third country imports, principally corn, are forecast unchanged with increased corn imports offsetting a forecast decline in wheat imports. Exports of wheat are currently forecast unchanged following a significant decline in MY2011/12 but much will depend on developments in the latter months of this season. Carry out stocks, down 2 MMT in MY2010/11, are forecast to fall a further 1 MMT in MY2012/13, reaching just 25MMT. As such, there is little room in the balance for a supply shock should the current grain harvest forecast not be achieved.