Wheat at Risk Across Europe From Driest Weather in Decades
May 18, 2011, 1:29 PM EDTBy Rudy Ruitenberg
(Updates with outlook for Ukraine in 22nd paragraph.)
May 18 (Bloomberg) -- Europe’s wheat crop, making up a fifth of global output, is under threat in the U.K., France and Germany from the driest growing conditions in at least 36 years.
France’s soft-wheat crop, the European Union’s largest, will drop 12 percent, and German output will slide 7.2 percent, local forecasters said today. Wheat jumped 4.5 percent to the highest level since Feb. 14.
Smaller-than-expected harvests may boost wheat prices that already rose 59 percent in a year after crops were hurt in the last growing season by floods in Canada and drought in Russia. This year, China is contending with drought while U.S. farmers are facing dry weather in some areas and too much rain in others. The U.S. Department of Agriculture is forecasting a second consecutive annual decline in global stockpiles.
“Given the tight levels of stocks for grains and oilseeds we need everything to go right,” Luke Chandler, global head of agricultural-commodity research at Rabobank in London, said in a phone interview. “Downward revisions such as in Europe have the potential to set us on another bull market over the summer.”
French soft-wheat production will slide to 31.65 million metric tons, the least in four years, from 35.7 million tons last year, as drought slashes yields to the lowest in at least 16 years, Agritel, a Paris-based farm adviser, said today.
Germany’s Slump
Germany’s wheat crop, the second-largest in the EU, will slump to 22.3 million tons from 24.1 million tons on the dry conditions, Deutscher Raiffeisenverband e.V. said in an e- mailed report today, reversing an April outlook for a 2.2 percent jump.
Soil moisture is now “critical” in the U.K., France, Germany, northern Italy, Belgium and the Netherlands after parts of Western Europe had their driest March on record, the EU’s Monitoring Agricultural Resources unit reported today.
“Rainfall is indispensable to ensure a proper grain filling in the coming weeks, otherwise the current yield forecasts will be sharply revised downward,” said the EU unit, know as MARS.
MARS compared the precipitation deficit in April this year against the 1975 to 2010 period and found last month ranked as the driest in parts of the U.K., France and Italy.
Weather Forecast
Through to May 25, “dry conditions will persist for Belgium, southern Germany, France as well as the U.K., with negative impact on crop yields,” MARS said. “The majority of Europe will experience a climatic water deficit of at least 30 percent higher than usual.”
Temperatures will be 4 degrees to 8 degrees Celsius above normal seasonal values in countries in northern Europe including Poland, Germany and France, MARS said.
In China, the worst winter drought on record in the country’s central Hubei province is persisting, cutting the region’s output of wheat and rapeseed and delaying planting of spring grain and cotton crops, the local Department of Water Resources said.
Some wheat farmers in the southern U.S. Great Plains are harvesting crops about two weeks earlier than normal as drought speeds up the maturity of the plants, U.S. Wheat Associates said May 12.
“Around the world we have a number of trouble spots,” Chandler said.
In northern France, which grows 80 percent of the country’s wheat, soil was the driest in a half century at the end of April, the French Environment Ministry said this week. The wheat crop is in a “danger zone,” the crops office said May 11.
French Yields
French soft-wheat yields are forecast to drop to 6.31 tons a hectare (2.47 acres) from 7.25 tons in 2010, said Agritel, which advises more than 2,000 farmers on crop sales.
“This reduction of the expected yield is the direct result of the lack of rain in the past three months,” Agritel said. “Precipitation in the past three months is down 30 percent to 80 percent compared to the seasonal normal. The excessive temperatures in April amplified the water stress on the crops.”
In Germany, wheat yields may slide to 6.87 tons a hectare from 7.27 tons, Berlin-based DRV said.
“The dryness of the past weeks has plagued the crops especially in the north-eastern regions and may lead to clear yield declines,” DRV said.
French Exports
Soft-wheat exports by France, forecast to be the world’s second-biggest shipper of the grain in the 2010-2011 crop year after the U.S., will slump, Agritel said. Shipments outside the EU will drop to 6 million tons from 12.8 million tons, according to Agritel, which advises more than 2,000 farmers on crop sales.
Global price gains may be limited by the return of Russian and Ukrainian supplies, Agritel said. Russia still has an export ban in place after last year’s drought while Ukraine has been limiting sales through a quota system.
Weather conditions and crop development in Russia are “in the normal range,” MARS said. Ukraine has had “overall good crop conditions,” with soil moisture at a sufficient level, and yields are forecast to be 2.9 tons a hectare, comparable to the five-year average, the agriculture monitoring unit said.
Overall EU soft-wheat yields are forecast to rise to 5.6 tons a hectare in 2011 from 5.5 tons a year earlier, MARS said. The yield forecast was cut from 5.7 tons in April.
‘Sharp Reduction’
Overall grain production in the 27-nation bloc is forecast to be 269.6 million tons, down 3.5 percent compared with the five-year average, according to the EU unit. “This forecast could be subject to a further sharp reduction if the weather conditions remain unfavorable,” MARS said.
Morocco, Algeria and Tunisia, which are wheat importers, received “good rainfall” in March and at the end of April that helped crops, MARS said.
Wheat yields in Algeria are forecast at 1.5 tons a hectare, compared with a five-year average of 1.4 tons, the EU unit said. Morocco’s wheat productivity is forecast to climb to 2.1 tons per hectare this year, up 22 percent from 1.7 tons last year, while Tunisia’s wheat yields are forecast to climb 56 percent to 1.8 tons a hectare, according to MARS.
The drought in Germany will cut rapeseed production by 23 percent to 4.44 million tons, while the country’s barley harvest will slump 15 percent to 8.9 million tons, DRV said in today’s report.
Malting barley for November delivery climbed 4 percent to 327.50 euros a ton in Paris, surging 15 percent in the past four sessions. Rapeseed for delivery the same month climbed 2 percent in the French capital.
European Union sugar-beet yields are forecast to slip 2 percent to 66.7 tons a hectare, with productivity in France, the world’s biggest grower, sliding 4.9 percent to 85.4 tons a hectare, MARS said.
--Editors: Stuart Wallace, John Deane
To contact the editor responsible for this story: Rudy Ruitenberg at rruitenberg@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
