Concerns grow over damage to EU wheat crop quality

PARIS Thu Jul 24, 2014 1:31pm EDT

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PARIS (Reuters) - Europe is heading toward a large wheat harvest this year but concerns are mounting that much of it could only be fit to feed animals after heavy rain earlier this month.

Damage levels are unclear for now with farmers and analysts still assessing the state of crops as harvesting resumes in many countries, but there is little doubt there be will less wheat meeting milling standards than initially thought.

"In light of the good yields expected we can still hope to see a good milling wheat output but we are certainly heading toward a lower quality than average," Benoit Fayaud from analysts Strategie Grains said, adding it was too early to have a clear picture of the European crop's quality.

The quality issue mainly concerned western Europe, Romania and Bulgaria, he said.

The consultancy last week again raised its monthly estimate for soft wheat production in the European Union to 140.5 million tonnes, now 4 percent above last year's crop.

In France, the EU's largest wheat producer and exporter, operators said only 30 percent of the crop had been cut as of Wednesday after rain over the weekend delayed harvesting.

Field work was resuming around Paris and in eastern France with initial results showing some damage, mainly in the measurement of milling quality, known as Hagberg numbers.

Average Hagberg could fall as low as 140-160 seconds in France this year, against 99 percent of the crop meeting the key level of 220 seconds in 2013, traders said.

"What was still good milling wheat 15 days ago has just become feed wheat," a broker in eastern France said.

Premiums for higher-quality wheat have soared in French ports on fears that this year's harvest would be spoiled by poor quality.

In an opposite move, feed wheat has been sold at a discount as traders anticipate hefty supplies of low-quality wheat.

But some French traders were more cautious.

"We must wait. A maximum 30 percent of the crops have been harvested and on the Atlantic coast, results are good. For the north, we'll know more next week when the harvest will be more widespread," one trader said.

PICTURE STILL UNCLEAR

In Germany, the EU's second largest wheat producer, rain fell just as harvesting started, raising concerns of some loss of quality and that some of the crop had been flattened.

"However, the picture is still unclear and we do not know if damage has been suffered nor the possible extent," an analyst said. "Weather in the north and north east of the country has been much better and I do not think there will be any quality problems in north Germany."

    About 15 percent of Germany's crop has been harvested. Forecasts are for showers in much of Germany including the north between Friday and Monday.

    Germany's farm cooperatives association on July 7 pegged the 2014 wheat crop of all types would rise 1.8 percent on the year to 25.46 million tonnes.

In Britain, the wheat harvest has barely begun but the outlook is generally favorable with production expected to rebound after two consecutive poor crops.

    "We've only really heard of one or two crops which have been harvested and we are not even at one percent at this stage," said analyst Susan Twining of crop consultants ADAS.

    The International Grains Council has forecast a UK wheat crop of 15.5 million tonnes, up 30 percent from last season.

(Additional reporting by Valerie Parent in Paris, Michael Hogan in Hamburg and Nigel Hunt in London, editing by David Evans)

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