Germany’s wheat crop joined France’s in suffering downgrades as the round of cuts to European Union prospects continued, including a forecast that the bloc’s exports will plunge by one-quarter.
Estimates for France’s harvest sustained the bulk of the writedown as Strategie Grains cut by 7.7m tonnes, to 137.9m tonnes, its forecast for the European Union soft wheat crop this year.
The French harvest, the EU’s biggest, was – thanks to “disastrous” yields – pegged at 29.9m tonnes, a downgrade of 6m tonnes from last month’s forecast, although a little above estimates from some other commentators.
Indeed, separately on Thursday, CRM AgriCommodities pegged French production at 28m-29m tonnes, as it downgraded to 128.9m tonnes its estimate for overall EU output, down from a figure of 131m-132m tonnes made two weeks ago.
In eastern France, “wheat crops looked terrible”, CRM co-founder Ben Bodart told Agrimoney.com, citing findings of a crop visit, adding that “hulls were not filled at all”.
‘Quality concerns are emerging’
However, the groups also confirmed expectations of a drop in production in second-ranked Germany too, albeit by nowhere near the same extent as the fall French output, with Strategie Grains lowering its forecast by 1.0m tonnes to 25.0m tonnes.
CRM, pegging the crop at 22.5m-23.0m tonnes said that yields in Germany were “likely to be 10-20% down” year on year.
In both Germany and Poland, the EU’s fourth-biggest wheat producer, “quality concerns are emerging as the harvest progresses”, CRM said, if underlining that “the crop is less damaged than in France”.
Better for the UK
The one major EU producer where results appear to be less disastrous than many had initially feared is the UK, the bloc’s third biggest wheat grower, although thanks to weaker sowings as well as a retreat in yields from last year’s record levels, the harvest looks like coming nowhere near 2015’s 16m tonnes.
While Strategie Grains lowered its forecast for the UK crop to 14.8m tonnes, that represented a downgrade of a modest 200,000 and was above some market estimates Agrimoney.com heard last month below 14.5m tonnes.
Indeed, CRM, which had pegged the crop at 14.5m-14.7m tonnes, said that early harvest results showed that “14.5m tonnes could be seen as too low”.
Citing results from client feedback, the group said that “the first cuts are rather promising,” adding that “we have a higher bias going forward” for production.
Feed vs milling
The results tally with other feedback received by Agrimoney.com over UK wheat harvest results, which have defied setbacks apparently evident in rapeseed and barley crops.
Some commentators have attributed decent results on quality, as well as quantity, for fuelling a rise in London wheat futures for November to a nine-month intraday high of £131.00 a tonne in the last session, with the contract standing at £130.65 a tonne on Thursday, a gain of 0.5% on the day.
The better-than-expected quality of the crop has improved the potential for the UK exploiting both the weakness of sterling and the poor French result to find foreign buyers.
“Early estimations have put the UK wheat surplus for this year’s harvest at roughly 1.8m-2.2m tonnes, with 500,000 tonnes of this expected to be feed grade,” said traders at a major European commodities house.
However, they added that given strong competition from the Black Sea, where Russia is expecting a record crop, “we could potentially have to wait until January until markets such as those in North Africa turn their attentions to the likes of the UK”.
On EU exports overall, Strategie Grains forecast volumes falling to 24.7m tonnes in 2016-17, a downgrade of 4.3m tonnes, with shipments seen undermined by the relatively strong prices encouraged by France’s poor harvest.
Shipments at that level would show a sharp drop on the 33.7m tonnes achieved in 2015-16, on European Commission estimates, and represent the weakest figure since the 21.7m tonnes reported for 2012-13.
Strategie Grains estimated 66% of the EU soft wheat harvest as being of milling grade, a drop of 5 points year on year.
In France, the decline is expected at 9 points to 79%, assuming millers can utilise a domestic crop which, while low on specific weight, scores more highly on protein.
(Source – http://www.agrimoney.com/news/german-hopes-cut-in-fresh-round-of-eu-wheat-downgrades–9835.html)