WASHINGTON, D.C., U.S. —The E.U.-28 2015-16 grain crop has been revised up to 306.8 million tonnes, the U.S. Department of Agriculture (USDA) Foreign Agricultural Services (FAS) reported on Nov. 4. This is 2.2 million tonnes more than previously forecast but 20.5 million tonnes down on last year’s record crop. The fall is almost entirely due to a much reduced corn harvest, now forecast to reach 57.5 million tonnes, over 18 million tonnes lower than in market year 2014-15.
While the area planted to corn is down 400,000 hectares, the large decline in production is mainly due to much reduced yields in the main corn growing countries as a consequence of challenging growing conditions during the key periods for crop development.
The E.U.-28 rye and mixed grain crops are also down year-on-year, by 1.4 million tonnes and 950,000 tonnes, respectively, again in large part due to reduced yields. In contrast, both the wheat and barley harvests are now estimated to be up on previous forecasts, by over 1.7 million tonnes and nearly 700,000 tonnes, respectively, while the oat harvest is up 400,000 tonnes.
Interestingly, all three of these crops are of a similar size to market year 2014-15. The E.U.-28 is estimated to have carried 31.9 million tonnes of grain stocks into the current marketing year, up over 6.5 million tonnes on a year earlier, and partially offsetting the reduced harvest. The plentiful supplies of domestic wheat and barley in market year 2015-16 but much reduced supply of corn means the focus is now turning to usage within the E.U.-28 and the likely implications for trade.
E.U.-28 wheat production is now forecast to be a record for the second consecutive year. Strong production has been reported across much of the E.U.-28 despite some weather related concerns earlier in the season.
Indeed, the early season wet conditions in Hungary, which were then repeated in May, have seen winter wheat yields in that country hit a 25-year high. In Germany, dry conditions in June and July negatively affected the yield although the crop is still expected to be 2 million tonnes above the five-year average and, at 26.5 million tonnes, only 1.2 million tonnes short of last year’s record. The E.U.-28 wheat production number has been further bolstered by a record sized crop in France which is currently forecast to reach 42.8 million tonnes, nearly 4 million tonnes larger than both the market year 2014-15 crop and the previous record 39 million tonnes achieved in market year 2008-09.
A second successive U.K. wheat crop of over 16 million tonnes, despite a reduced planted area, has also added support. The quality of the soft wheat crop in France, the E.U.-28’s largest wheat exporter, is described as good and moisture content is low due to the very dry conditions at harvest. Its durum wheat crop is also described as being of good quality, both in yield and protein content, a sharp improvement on market year 2014-15. Elsewhere, quality is also reported to be good, notably in the U.K., in Hungary and in Germany, the latter benefitting from dry weather at harvest. While year-on-year imports are forecast little changed, an increase in Spanish third-country imports is offset by a forecast decline in those by Italy.
On the wheat demand side, with Food, Seed & Industrial (FSI) use relatively stable, the focus is on exports and feed use. The improved availability of feed wheat within the E.U.-28 will see consumption rise year on year, particularly in France and Germany. On third-country export markets, the current pace of E.U.-28 wheat export licenses is significantly behind market year 2014-15 despite Egypt's recent purchase of 240,000 tonnes of French, Polish and Romanian wheat.
Until this purchase, recent Egyptian tenders had seen France, which has a large exportable surplus of milling quality wheat this year, facing early season competition from Black Sea origin wheat. Despite the slower start to the export campaign this season, the ample supplies mean wheat exports are currently forecast to reach 33 million tonnes, 1 million tonnes above market year 2013-14 and only 2.2 million tonnes short of last season’s record export figure. Even with the forecast 3 million tonnes year-on-year increase in feed use in market year 2015-16, ending stocks are also currently forecast to rise again.