Analysts cut EU wheat crop outlook again on 'catastrophic' north

PARIS (Reuters) - Analysts at Strategie Grains made another steep cut to their estimate for this year’s European Union soft wheat harvest, citing parched conditions in northern Europe that have led to “catastrophic” yields in Germany and Scandinavia.

FILE PHOTO: Wheat is seen in a field near Munich, Germany, July 30, 2018. REUTERS/Michael Dalder/File Photo

In a report published on Thursday, the French-based firm projected EU soft wheat production at 127.7 million tonnes, compared with 132.4 million estimated a month ago and just under the 130 million it forecast in a late-July update.

The latest crop estimate put production down 10 percent compared with last year’s volume.

Drought and heatwaves since late spring have withered crops in northern Europe, fuelling concern about tightening grain supplies and sending Paris wheat futures to their highest in over five years.

Strategie Grains also lowered sharply its outlook for the EU’s barley harvest, pegging production at 57.1 million tonnes, down 2.5 million tonnes from its July estimate and now 2 percent below 2017 output.

“Yields in Poland and the Baltic countries are very low and they could even be described as catastrophic in Germany and Scandinavia,” it said of wheat and barley.

“Disappointingly low yields are now confirmed in France, Italy, UK, and the central and southeast EU countries,” it added.

Cereal quality appeared mixed, with reasonable winter barley quality, very varied wheat results and particular concern about spring malting barley due to excessive protein, it said.

For soft wheat, it stressed that Romania and Bulgaria would have much more feed wheat than usual due to rain during harvesting, while Germany and Poland were showing very contrasting results for test weights and Hagberg numbers, two measures of milling quality.

For grain maize, which is mostly harvested in autumn, Strategie Grains raised its monthly crop forecast by 700,000 tonnes to 61.3 million tonnes, now up 3 percent versus 2017.

Favourable conditions in Romania, Bulgaria, Hungary, Italy and Spain were compensating for crop stress from hot, dry weather in Germany, Poland, France and the Czech Republic, it said.

Reporting by Gus Trompiz and Valerie Parent; Editing by Dale Hudson