With some significant rain falling in Europe and the Black Sea region, market analysts are puzzling over yield expectations for the 2020 grain harvest. In Europe, drought has not yet claimed many tons. A smaller area in particular has an effect.
In the European Union, the area under grain is 540.000 hectares lower. An extremely wet autumn, followed by an equally wet winter, has resulted in significantly less sowing in Northwestern Europe. In Central and Eastern Europe it was very dry, which made it difficult for crops to develop. Drought also prevailed this spring.
Significantly smaller area
The European Commission now estimates the European wheat harvest at 125,8 million tons. That is a reduction of 5 million tons compared to 2019, as a result of a significantly smaller area. The figures give a distorted picture compared to previous years, because Brussels no longer includes the United Kingdom in the figures. The harvest forecast for barley has actually increased by 1,8 million tons to 56,1 million tons.
For the 2019-2020 season, the European Commission has increased the wheat export figure to 31,8 million tonnes (including the United Kingdom). This is an increase of 1,8 million tonnes compared to the previous forecast. For the current season, consumption will be adjusted downwards by 300.000 tons.
More tons worldwide
The International Grains Council has also published new figures. They estimate the global wheat harvest at 764 million tons. A reduction of 4 million tons from the previous forecast, but still 2 million tons than a year ago. This figure is a record. However, it is questionable whether this is reality, but it does influence the market.
Analysts do not readily agree on the size of the Russian wheat harvest. Forecasts range from 76,6 to 84,5 million tons. This spread can be explained because the growing conditions are taken into account in different ways. Significant precipitation is currently falling in the Black Sea region. The question now is to what extent this can help the crops. For some areas, rain comes too late to bring relief. A significantly larger wheat area partly compensates for the yield loss.
Long term
Russian wheat prices have fallen sharply as exporters can no longer sell and ship new cargoes. However, for the 2020-21 season, the country is again Europe's biggest competitor. If it remains dry, the wheat price may remain at a strong level (between €8 and €195) in the last 205 weeks of the season with the absence of Russian trade. Before the start of the coming season, there is not enough going on to maintain such a level and the price is coming under pressure.
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