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European Union 28 - Grain and feed, annual report


April 1, 2014

USDA/FAS GAIN report 1401

Report Highlights:

The outlook for the MY2014/15 EU28 grain crop is positive with another sizeable crop forecast. The winter crops benefitted from good planting conditions and a mild winter. Normal spring planting is now under way. Feed grain consumption in MY2014/15 is forecast down, albeit following a significant upturn in MY2013/14 which is seeing a move towards corn and barley from wheat - the latter benefitting from strong demand on third country export markets. Industrial grain usage is again forecast to rise but with a changing mix of grains. The MY2014/15 balance suggests that the EU28 will again be able to meet export demand, most notably from North Africa for wheat, but much will ultimately depend on the size and quality of the harvest. Another unknown is the export situation in Ukraine, both a key supplier to the EU28 market as well as a competitor.

Executive Summary

EU28 farmers are expecting a sizeable grain crop of 296 MMT in MY2014/15. This follows the 302 MMT grain crop in MY2013/14 and, if realized, will be the third largest crop in a decade, the record being 312 MMT in MY2008/09. Contrary to expectations this time last year, stock recovery is expected to be very limited in MY2013/14 due to a combination of strong domestic consumption and expected record wheat exports. With total domestic consumption forecast little changed in MY2014/15, stocks are currently forecast to fall once again, even with a forecast reduction in exports. Much will depend on the ultimate size and quality of the EU28 crop although another unknown is the export situation in Ukraine, both a key supplier to the EU28 market as well as competitor on third country export markets.

Generally, conditions are pointing towards a good MY2014/15 harvest, both in terms of size and quality. Plantings of the winter crops went very well, the only delays of note being in the Czech Republic as a consequence of a late harvest. A wet fall across much of Europe saw crops planted and developing in soils with good moisture levels, the exception being Hungary which has seen precipitation at 50 per cent of the 30 year average in some regions. Although Romania and Bulgaria both had reduced year-on-year snow cover, plentiful rain in the spring means that both their wheat and barley crops are reported to be developing very well. A lack of winterkill and an early start to the growing season resulted in good crop development in Poland and Germany. In the south, both Italy and Spain also report good crop development, buoyed by plentiful rains in February. The latter is reporting excellent soil moisture levels and reservoir supplies which bodes well for the future development of the crop. Both France and the UK experienced a very wet winter. Indeed, the UK had its wettest winter on record. This has seen flooding in some areas but the impact on arable crops is expected to be limited. More of a concern has been the impact of a high water table and standing water in fields for spring plantings but with March has come a dry spell allowing these fields to drain and spring plantings to commence. The milder winter temperatures in the UK and France have also encouraged excessive growth, meaning increased likelihood of lodging come harvest, and disease pressure.

Looking forward to the EU28 corn plantings, both Romania and Bulgaria had reported producer concerns regarding the European Commission’s decision to restrict the use of three pesticides from the neonicotinoid family. In Romania, this has abated following the Ministry of Agriculture’s decision to temporarily authorize the utilization of these three insecticides for a limited timeframe and subject to conditions agreed with the seeds companies. Bulgaria is expecting to see increased planting density in an effort to offset the impact of the pesticide rule change.

Forecast MY2014/15 EU28 grain production exceeds domestic consumption by nearly 18 MMT. After a sharp recovery in feed grain consumption in MY2013/14, which saw a move towards corn and barley from wheat, MY2014/15 is forecast to see a marginal decline. An increase is again seen in food, seed and industrial (FSI) use of grain, predominantly due to continued increases in grain used for renewable transportation fuels. Interestingly, with margins being squeezed in the sector, the mix of grains being used in MY2013/24 has changed, with corn and even barley being substituted for wheat due to the increased prices being achieved for the latter on export markets. Third country imports, principally corn, are projected to decline as compared to MY2014/15, themselves down on MY2012/13. This season’s demand for corn has been fuelled by the very strong pace of wheat exports, forecast to reach 28 MMT due to ongoing demand, principally from North Africa. However, wheat exports in MY2014/15 are forecast to fall back slightly to a still substantial 25 MMT. Total grain stock levels remain relatively low meaning there is little room in the balance for a supply shock should the current grain harvest forecast not be achieved or the situation in Ukraine impacts on the global trade balance - not only is Ukraine a source of grains for the EU28, it also a competitor on third country markets . Although grain exports from Ukraine are reported to be unaffected at this time, recent rises in futures prices suggest the market is nervous looking forward.

Full report



More news from: USDA - FAS (Foreign Agricultural Service)


Website: http://www.fas.usda.gov/

Published: April 4, 2014

 
 

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