Strategie Grains has made a sharp increase to its forecasts for European Union production and exports of soft wheat this season, citing strong harvest expectations in France and Britain together with increasingly competitive EU export prices.
The French consultancy now sees 2019/20 soft wheat production in the EU at 142.9 million tonnes, up from 140.6 million tonnes projected in July and 12% above last year's drought-hit crop, it said in a monthly grain report.
'Upward Revision'
The upward revision, which reversed a similar-sized cut last month, was in keeping with rising market expectations for a large EU wheat crop despite record-breaking heatwaves this summer.
"Production is lower than expected in Bulgaria, but very good results in France and an uplift compared with expectations for the UK harvest have more than outstripped the losses in the southeastern EU," Strategie Grains said in its report.
Its monthly EU estimates incorporated increases it has made in the past month to its harvest outlook for France, where it expects soft wheat production to rise to about 39 million tonnes.
For barley, the Strategie Grains analysts raised their EU production forecast to 60.5 million tonnes from 59.3 million tonnes, now 9% above last year's level, again citing large French and British crops.
A 500,000 tonne increase to Strategie Grains' projection for 2019/20 EU maize (corn) output, now pegged at 63.2 million tonnes, reflected excellent conditions in southeast Europe, which offset heatwave damage to maize in France and to a lesser extent in Germany and Poland, it said.
For exports, forecast EU soft wheat shipments were put at 24.8 million tonnes, up from 21.9 million tonnes estimated by Strategie Grains a month ago and also well above the 21 million tonnes exported in 2018/19.
Improved Competitiveness
A fall in west European prices had improved their competitiveness against Black Sea suppliers such as Russia, it said.
"This has produced two important consequences: Ukrainian wheat is no longer competitive for import into the EU, and EU wheat is in the process of attracting international export demand away from Russian wheat," Strategie Grains said.
Official EU data shows soft wheat exports in the 2019/20 season, which started on 1 July, are running 30% below last season's pace. But analysts say volumes for the new season are underestimated because of delays in receiving customs data from EU member states.
Increasing competitiveness of wheat for use in livestock feed could also absorb more of the harvest and help to push down EU wheat stocks by the end of the season, Strategie Grains added.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
