Analysis Grains & Commodities
Drought not reflected in EU harvest estimate
A broad strip across northern Europe is dry. This is also reflected in the new Mars bulletin. However, the European Commission's yield estimate reflects this drought only to a limited extent. The average grain harvest in the EU is estimated to be 5% above the five-year average. A similar message comes from Russia. SovEcon calls the lack of moisture a risk for the upcoming wheat harvest, but has increased its estimate for the upcoming Russian grain harvest.
Would you like to continue reading this article?
Become a subscriber and get instant access
Choose the subscription that suits youThe September wheat contract on the Matif closed yesterday €3 higher at €221 per tonne. On the CBoT, wheat closed 0,7% higher at $5.49¼ per bushel. Corn was slightly higher than wheat on the Chicago exchange, closing 1,4% higher at $4.61 per bushel. Soybeans were up 0,9% at $10.62¾ per bushel.
It is dry in a large part of Europe, as you will have noticed, and this is confirmed once again today in the April edition of the Mars Bulletin from the JRC, the scientific bureau of the European Commission. From northern France to the Baltic States and southern Finland, the map is colored red. In this region, there has been at least 50% less rain than average. The JRC even speaks of the driest period since 1991.
However, the agency is not yet negative about the expected grain yields for the coming harvest. The average grain yield is estimated at 5,46 tonnes per hectare. That is 5% above the five-year average. For wheat, the average yield in the EU is estimated at 6,03 tonnes per hectare, compared to 6,00 tonnes in the March edition of the report and 5,77 tonnes in the five-year average. The average forecast for winter barley stands out with an estimated yield 8% above the five-year average. In terms of yield per hectare, the JRC is talking about 5,18 tonnes per hectare. However, the JRC is cautious. "Although the dry spell initially allowed a recovery from the extremely wet winter conditions, further rain is now essential to prevent yield expectations from falling," the institute writes.
Southern and Eastern Europe have very different problems
In Eastern Europe, drought is not the biggest problem, but a late frost period until early April has delayed the sowing of spring crops. However, it is not too late to sow corn, for example, the JRC notes, and they therefore expect that there will be some catching up to do. In Southern Europe, farmers are suffering from too much rain. On the Iberian Peninsula, this is not yet causing immediate problems, but in Italy, the 'growing conditions are suboptimal' according to the JRC.
There was also a somewhat contradictory report about the Russian grain harvest yesterday. SovEcon is raising the forecast for the wheat harvest from 79,8 million tons to 81,0 million tons. The comment is that a lack of moisture in the soil remains a point of concern. In various regions, the yield could be disappointing if rain does not come in the coming period, according to SovEcon. Last season, 82,6 million tons of wheat were harvested in Russia and the USDA is counting on a harvest of 83 million tons for this season.