(Updates corn price in fifth paragraph and adds drought comment in last paragraph.)
July 1 (Bloomberg) -- The U.K., the European Union’s third- biggest wheat producer, will lose fewer crops than previously expected this year as rain followed the driest spring on record.
About 14 percent of the U.K. crop may be lost, compared with an estimate of 50 percent before last month’s rainfall, said Jenny Bashford, a water policy adviser for the National Farmers Union. About 63 millimeters (2.5 inches) of rain fell in the past five weeks, twice as much as between March 1 and May 27, the Home-Grown Cereals Authority said yesterday.
“We’ve had more rain in a month than we did in the whole five months before that,” said Robert Law, a farmer from Hertfordshire, England, who tends 2,000 hectares (5,400 acres) of wheat, barley and rapeseed. “The rain has averted a disaster.”
Grain prices tumbled yesterday after the U.S. Department of Agriculture said farmers planted more crops than analysts were expecting and the International Grains Council raised its estimate for the global corn and wheat harvests. Lower food costs may slow the acceleration in consumer prices that has spurred more than two-dozen countries to raise interest rates this year, potentially slowing growth.
Wheat traded on the Chicago Board of Trade, a global benchmark, fell by the most allowed by the bourse yesterday, declining 8.9 percent to $6.1425 a bushel, the lowest in 11 months. Corn tumbled 4.6 percent and retreated another 5.1 percent to $5.89 a bushel by 11:24 a.m. in London.
“The rain won’t repair the damage that’s been done but it will stop it from getting any worse,” Bashford said. Wheat, barley and corn were hit hardest by dry weather because they don’t have irrigation, she said.
Drought was declared last month in the grain-growing East Anglia region, which accounts for 53 percent of the U.K.’s sugar-beet output, 17 percent of wheat and 13 percent of barley. The counties of Lincolnshire and Cambridgeshire and parts of Bedfordshire and Northamptonshire, all in central or eastern England, are in a drought, according to the Environment Agency.
The recent rainfall hasn’t helped boost groundwater supplies which are short “because the soil is very dry,” the agency said in a report today. Water levels aren’t expected to rise in the summer months, according to the report.
Wheat crop estimates for the U.K., France, Denmark, Hungary and Poland were lowered yesterday by the London-based grains council, citing the dry weather.
The U.K.’s total grains production for 2011-12 will be 19.8 million tons, down 8.3 percent from the previous estimate, and slipping behind Spain’s total production for the first time since at least 2008, according to the report.
The U.K.’s wheat crop estimate was lowered to 14 million tons from 15.5 million tons, France’s was reduced to 34 million from 35 million while Germany’s was unchanged at 23 million tons.
Corn plants that didn’t grow as tall as normal in the dry weather in the U.K. benefited from the rain in June, Bashford said. Fatter kernels on plants in areas where ample rain has fallen probably produced higher-quality corn, she said.
“It’s more about the quality of what is being produced than the quantity,” she said.
Winter wheat and barley yields in the U.K. will likely be “trimmed back” and his spring crops including barley seeded in March and April were the most damaged from dry weather, Hertfordshire grower Law said. Even some plants seeded earlier probably won’t do well, he said.
‘Not a Good Crop’
“Some crops have responded to the rain but for some I’m afraid the damage was done,” Law said. “Spring barley was too thin and too far gone to recover. Winter barley looks about average, and winter wheat is going to be well down on average. It’s not a good crop out there.”
Temperatures in the U.K. cooled in the past month, lengthening the period when the grain is formed, resulting in larger kernels and higher quality crops, the HGCA said. Less sunshine was available, a detriment to growing crops, and some areas in eastern, southwest and central England are still deficient in soil moisture, according to the report.
“A return to drier weather could have further impacts,” the HGCA said. “There is still considerable uncertainty about yield prospects for 2011 with results likely to be highly variable depending on soil type, local rainfall and crop management.”
Dry weather that’s expected in July will add to water- supply concerns and some restrictions may be put in place, the U.K. Environment Agency said in a report today.
“We may see drought conditions spreading into central England and further east,” the agency said. “Additional formal restrictions on farmers who irrigate may be necessary toward the end of July and customers may face restrictions by late summer.”
--With assistance from Rudy Ruitenberg in Paris and Whitney McFerron in Chicago. Editors: Claudia Carpenter, Dan Weeks
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