EU Drought Cuts Grain Harvest to Lowest Since 2012
(Dow Jones) — Searing heat and drought will cut the European harvest of crops like wheat and barley to its smallest since 2012, a French consultancy said.
Strategie Grains on Thursday forecast that soft wheat production in the European Union would fall to 127.7 million metric tons in 2018-19, down 4% from its previous estimate and 10% smaller than last year’s crop.
Lower barley, durum and rye production would bring total EU grain output down to a little over 282 million tons, it said, 5% below last year and down 3% from its most recent estimate.
“Catastrophic” yields in Germany and Scandinavia — along with disappointing yields in France, Italy, UK and the central and southeastern EU — cut into harvests, according to the consultancy.
“The outlook for EU wheat is becoming more and more tight,” Strategie said. European wheat prices rose to the highest level in more than four years last week as a heat wave spread across the continent. The U.K., for example, has had its hottest summer in four decades, with temperatures further south pushing records.
Strategie forecast that tight stocks around the world, with the likes of Russia and Australia also suffering through drought, will allow prices to continue rising in 2018-19.
Wheat is typically harvested between June and September in Europe. Strategie said that aborted crop growth, a consequence of the dry weather, allowed many farmers to wrap up their seasons earlier than usual.
The consultancy said that EU wheat would nevertheless continue to attract export demand due to its competitiveness relative to the U.S. It’s usually cheaper for major wheat importers in the Middle East and North Africa, for example, to source grain from Europe and the Black Sea than North America.
More generally, analysts expect the U.S. to benefit nonetheless from what is shaping up to be a tough year for wheat producers around the world. The U.S. Department of Agriculture currently forecasts that it will be one of the only major producers to increase output this year, which should give it larger exportable supplies.
U.S. wheat prices at the Chicago Board of Trade last year rose to the highest level in three years.