French officials slash wheat yield hopes to to 30-year low

08.08.2016

Hopes for the European Union wheat harvest took another knock as French officials slashed estimates for domestic yields to a 30-year low, amid talk of weaker harvest results in the bloc's other top growing countries too.

The French farm ministry downgraded by 1.50 tonnes per hectare to 5.57 tonnes per hectare its estimate for the domestic soft wheat yield, a result it said would be the "lowest since 1986" – ironically a drought year.

This year, the ministry cited wet, cool and overcast conditions which, after setting in during May, had "degraded" yield potential for winter crops.

"During critical periods of flowering and grain-filling, the lack of heat and brightness, as well as excess moisture strongly penalised performance," the ministry said.

"Excessive" rains, particularly in the Paris Basin, had "encouraged the proliferation of insects, diseases, fungi and pests".

The data came as FranceAgriMer, the official crop bureau, estimated the soft wheat crop, now more than 50% harvested, as being in 35% "good" or "excellent" condition, down 5 points week on week and well below the 77% figure a year ago.

Production downgrade

The ministry estimated the French soft wheat harvest, the EU's biggest, at 29.1m tonnes, a drop of 11.8m tonnes, or 21%, year on year, and the weakest result since 2003.

French crop estimates, change on last month and (year on year)

Soft wheat: 29.099, tonnes, -7.853m tonnes, (-11.811m tonnes)

Winter barley: 7.826, tonnes, -1.309m tonnes, (-2.178m tonnes)

Rapeseed: 4.50m tonnes, -326,000 tonnes, (-807,000 tonnes)

Spring barley: 2.411m tonnes, -170,000 tonnes, (-613,000 tonnes)

Durum: 1.438m tonnes, -376,000 tonnes, (-368,000 tonnes)

Source: Agreste

The revision also represented a downgrade of 7.85m tonnes from last month's ministry estimate for the crop – equivalent to wiping out a harvest roughly the size of that in Romania, the EU's fifth-ranked wheat producer.

And the figure from the ministry, which cautioned that further revisions to its number were likely, took the official harvest projection below those many from private commentators - albeit not beneath an estimate of 28.2m tonnes from consultancy ODA earlier this week.

Germany and Poland

The data come amid some doubts over harvests in other major EU wheat-producing countries too, although commentary does differ between sources.

In Germany, the EU's second-ranked wheat grower, the Deutscher Bauernverband (DBV) farmers' group earlier this week cautioned over the poor signal for wheat prospects coming from results from the barley harvest, where yields for winter crop have come in nearly 13% lower at 6.7 tonnes per hectare.

There is some talk too of weaker results in fourth-ranked Poland, where "rains are now hampering" the harvest, as in France and Germany, according to analysis group CRM AgriCommodities.

US broker Benson Quinn Commodities added that "it looks like yields in portions of Germany/Poland are trending 10-20% below the prior year".

'Suffered greatly'

Meanwhile, a reduction in the UK's crop is expected too, thanks to a drop in yields from last year's record levels, as well as a decline in sowings.

"After a wet spring leading to high disease pressure and a lack of sunshine in June followed by a flash heatwave mid-July, UK crops suffered greatly in the most critical grain-filling stages," CRM said, citing comments from its clients.

It pegged the harvest at 14.5m-14.7m tonnes, with a central forecast of 14.53m tonnes down nearly 12% year on year.

Market impact

However, the French data had little impact on futures markets, with Paris futures for December up E0.25 at E169.75 a tonne in morning deals, when London's November contract was £0.45 a tonne lower at £127.00 a tonne.

"The question is what the market is pricing in already for European production, and the kind of figure that the ministry is talking about has been out there for a while," a UK grain trader told Agrimoney.com.

"You also have to remember the negative effect of prices of the growing estimates for Russia's harvest," with RusAgroTrans this week raising its forecast for the Russian wheat crop to a record high above 70m tonnes.


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