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EU Wheat Crop On Course For 10% Drop After Weather Swings

Published on Jul 7 2020 5:50 AM in Supply Chain tagged: Trending Posts / Wheat / EU / Britain / European Commission

EU Wheat Crop On Course For 10% Drop After Weather Swings

Unfavourable growing conditions are putting the EU and Britain on course for a 10% drop in wheat output this year, with weather swings creating more uncertainty as harvests start, a Reuters survey showed.

The 27-country European Union and Britain, which left the bloc in January, are expected to harvest 131.3 million tonnes of common wheat - or soft wheat - in 2020, according to an average of 15 forecasts by analysts and traders.

That would bring output closer to a drought-hit crop of 128.3 million in 2018 than last year's 147 million, as estimated by the European Commission.

The Main Drag

France and Britain are seen as the main drag on wheat output after soggy autumn conditions disrupted sowing. A parched spring also affected other parts of Europe.

"There's going to be a lot of attention on France, and with the barley yields being reported, there could be cuts to wheat forecasts," Nathan Cordier of consultancy Agritel said.

"At the same time, we're seeing a recovery in countries like Poland."

Mixed barley yields fuelled apprehension that France could be in a similar position to 2016, when its worst yields in three decades only became apparent during harvesting. British crops could also deteriorate further.

Some expect June rain and moderate temperatures to have averted dire crop losses, boosting prospects in Germany and Poland.

With late rain also raising doubts about Romania's harvest after earlier drought, the EU crop is looking hard to call.

"The growing season has been too mixed and difficult across the different seasons and geographic regions to expect any homogeneity," said Noel Fryer, analyst and author of Fryer's Reports.

Wheat crop losses could curb exports after a brisk 2019/20 season to 30 June 30.

Large Harvest

A large harvest is expected in top wheat exporter Russia, which has gained access to Saudi tenders and is seeking a foothold in Algeria, the top buyer of EU wheat.

The coronavirus pandemic and resulting economic downturn is also casting a cloud over global demand.

"The main worry is the demand side with economies hurt in importing countries," one trader said.

Britain could see the most abrupt change in flows, with the plunge in output turning it into a large net importer.

This could attract supplies from EU exporters like Germany if they have a reasonable harvest.

"Germany has been under the radar but its (high-protein) wheat is likely to be in high demand, especially in the UK," Peter Collier of consultancy CRM AgriCommodities said.

News by Reuters edited by Checkout. Click subscribe to sign up for the Checkout print edition.

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