Good weather boosts EU25 grain crop - analyst

Wheat production will be up 21 percent at 118.9 million tonnes, barley five percent higher at 57.3 million tonnes and maize up a hefty 35 percent at 53.1 million tonnes, it added.

Wheat and maize were particularly badly hit last year by frosts, drought and a prolonged heatwave. But weather patterns this year have been more benign -- at least so far.

"Conditions for crop development have remained good throughout the EU and the cereals are making good progress," Strategie Grains said in its monthly report.

"They (yields) could be lower if weather events disturb the growth cycles, for example in the wake of dry weather in the spring of if high temperatures at the end of the growth cycle lead to scald."

The EU-25 total grain estimate is 300,000 tonnes up on its forecast last month and 6.5 million tonnes higher than the one given by French grain office ONIC on Wednesday, which forecast the EU-25 harvest at 263 million tonnes.


WHEAT STOCKS REMAIN LOW

Strategie Grains raised its forecast for wheat production across the enlarged bloc by 500,000 tonnes from last month due to the good weather.

It estimated intra-EU trade at 18 million tonnes, up one million on 2003/04, and noted new crop UK wheat remained cheaper than French and German, but there was competition from the east.

"Hungarian wheat is now looking increasingly competitive against French and UK wheat," it said.

Although world wheat output is set to increase next season, the analyst saw little room for an increase in global stocks, already at low levels, with a further reduction possible.

"If world import needs turn out to be higher than current projections (demand in China could be significantly greater), then tension could rapidly escalate," it noted.

Set against high world demand, the EU-25 will have an exportable surplus of some 15 million tonnes of wheat, of which it should be able to export at least 10-12 million.

Whether the residual three to five million tonnes found an export home would depend on the level of world production and any changes to import needs over the next few months, it said.


MORE DOMESTIC COMPETITION FOR MAIZE

The EU-25's maize market will become much more self-sufficient in 2004/05 after the high level of imports this season due to drought, currently seen at five million tonnes.

"The volume of intra-EU maize trade should expand significantly, with French and Hungarian maize replacing a large proportion of this year's imports from third countries, and competing against each other for intra-EU demand," it said.

Barley output is set to rise by three million tonnes to 57.3 million tonnes, although the proportion suitable for malting usage will be lower than in 2003/04, Strategie Grains said.

At the world level, barley availability among the EU's main competitors on export markets should remain flat and availability in Australia, Canada and Russia could decline.

The analyst said that with international demand set to remain high and EU-25 export availability probably only slightly higher than 2003/04 at 3-4 million tonnes, the outlook was looking relatively tight.



Source: Reuters