Strategie Grains cuts EU wheat crop forecast due to winter cold

PARIS (Reuters) - Consultancy Strategie Grains lowered its forecast for the 2017 soft wheat harvest in the European Union by 1.2 million tonnes to 143.8 million as it factored in expected damage to crops in the eastern EU due to severe cold weather this month.

The reduced forecast would be 6 percent above estimated production of 135.9 million tonnes last year, when output was curbed by a very poor harvest in top EU wheat grower France, Strategie Grains said in a monthly report.

The firm’s analysts reduced expected production in Hungary, the Czech Republic, Slovakia, Lithuania, Bulgaria, Poland and Romania by a combined 1 million tonnes in view of a very cold spell in central and eastern Europe in early January.

“Some loss of acreage to winterkill and reduction to yield potentials is now expected. Hungary could be the worst hit country because very little (in some places no) snow fell to protect the crops,” Strategie Grains said.

Further crop damage was possible following another severe cold front that developed late last week in central Europe and across into Germany and France, although this would depend on its duration and intensity, it said.

Grain traders have mostly viewed the risk of winter losses as limited due to snow cover and the healthy condition of crops coming into winter, although the impact tends to be hard to judge until crop growth resumes towards spring. [GRA/EU]

Another risk to EU crops this year could be moisture levels in France and Spain, where dry weather has prevented usual winter replenishment of groundwater reserves, although the impact also depends on rainfall in spring, Strategie Grains added.

The anticipated rise in EU soft wheat production this year, along with an expected recovery in crop quality in France after last year’s weather-spoiled harvest, should allow the EU to increase exports next season, it said.

EU soft wheat exports in 2017/18 were projected at 26.5 million tonnes, it said in its first forecast for next seasons’s exports. This was up from 23 million now expected in 2016/17, an estimate it revised down by 400,000 tonnes from last month.

Winter barley crops were also expected to suffer some losses due to the cold weather but this would be offset by a higher projected area sown with spring barley, it said, raising slightly its forecast of total EU barley production in 2017 by 200,000 tonnes to 61.2 million, up 2 percent from last year.

The consultancy also raised its outlook for EU grain maize production this year, by 400,000 tonnes to 61.3 million, as it similarly pointed to expected area gains for the crop, which is exclusively sown in spring.

Reporting by Gus Trompiz; Editing by Ruth Pitchford