The consultancy now sees 2024/25 soft wheat production in the 27-country bloc at 121.8 million metric tons, 1.7 million tons less than it projected in May.

The consultancy’s latest projection is 3.6 per cent below last year’s output and would be the lowest since 2020/21 when the crop was also affected by heavy rain during the growing season.

In a summary of its monthly cereal report, Strategie Grains did not give reasons for its downward revision to the forecast, but said it anticipated France would see the biggest year-on-year decline in production followed by Germany, Poland and Hungary to a lesser extent.

In France, the EU’s top grain producer, torrential rain cut soft wheat sowing by more than seven per cent.

The consultancy also lowered its outlook for this year’s EU barley crop to 52.2 million tons from 53.0 million last month, though this would still be 10 per cent above last year’s drought-hit crop of 47.5 million tons.

Wheat and barley harvesting started this month in southern Europe, with mixed yield indications so far, Strategie Grains said.

In Spain, which is recovering from severe drought last year, first yield results in the south were good but levels are expected to decline as the harvest moves north, it said.

Yield results so far in Romania were contrasting, close to average in Slovenia and Croatia, while disappointing in northern Italy, it added.

The smaller expected EU harvest, coupled with an anticipated drop in Black Sea supply, should sharply cut stocks in the bloc from a high level this season to a “rather fragile” level in 2024/25, the consultancy said.

Weather-hit harvest prospects in Russia and to a lesser extent Ukraine led Strategie Grains to cut its forecast for world soft wheat production for 2024/25 by almost 10 million tons to 713.3 million tons, putting production below this season’s 719.9 million tons.

Strategie Grains trimmed its outlook for this year’s EU maize harvest to 62.6 million tons from 63.3 million, now stable with last year’s level.

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The EU wheat crop was expected to yield 123.3 million tonnes, down from 124.4 million projected in June and below the revised 129.9 million tonnes harvested last year, it said in a monthly report.

The barley harvest was seen at 49.6 million tonnes, down from 50.3 million last month and 51.9 million in 2021.

The French firm had already lowered its wheat and barley crop estimates last month, citing overly dry conditions during the first half of the growing season in many countries.

In maize, the crop was seen falling to 65.4 million tonnes, down from 66.8 million tonnes estimated last month and 69.7 million last year.

“Recurrent water shortages and hot weather in many production zones are adversely impacting yield potentials,” Strategie Grains said, echoing mounting fears of damage to this year’s maize crops.

On the wheat market, the analyst kept its EU export forecast nearly unchanged at 30.4 million tonnes based on strong competitiveness against rival origins and dynamic sales during the first weeks of the campaign.

Strategie Grains’ forecasts were based on maritime exports reaching 30 to 50 per cent of usual capacity but the outlook was not set in stone with new negotiations underway to secure an export shipping corridor for Ukrainian grain exports, it said.

Ukraine is one of the world’s largest corn, wheat and oilseed exporters, with Russia and the European Union among its main competitors on export markets.

Russian exports were seen at close to 40 million tonnes but could be at least five million tonnes larger if Russia harvests more than 89 million tonnes, Strategie Grains said.

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The closure of Ukrainian ports and sanctions imposed on Russia after it invaded its neighbour have disrupted shipments through the Black Sea, sending grain prices to record highs.

In a monthly report, France’s Strategie Grains cut its projection for wheat exports out of Ukraine by almost six million tonnes and from Russia by five million tonnes.

“Main exporters such as Australia, the U.S., India, the EU-27 and, to a lesser extent, the South American countries, will need to step up their exports to plug the gap,” it said.

Consequently, the consultancy lifted its estimate for wheat shipments from the 27-member European Union this season by two million tonnes to 32.5 million tonnes.

In maize, the war was likely to remove 12 million tonnes of Black Sea supplies from the world market as disruptions prevent much of Ukraine’s planned exports through September from leaving the country, Strategie Grains said.

These would need to be replaced by exports from North and South America and India, it said.

The rally in grain and energy prices in the past weeks added to feed costs that had already jumped during a commodities rally last year, taking a toll on animal farming.

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However, the consultancy also echoed mounting concerns over the potential impact on grain quality from recent wet weather in southeastern and western areas of the EU.

The consultancy forecast that the 27-country bloc would harvest 133.0 million tonnes of soft wheat in 2021, up from 131.1 million projected in June and more than 14 million tonnes above last year’s crop.

The estimate was also well above the average of 10 forecasts in a Reuters poll that pegged the harvest at 130.4 million tonnes.

For barley, Strategie Grains raised its 2021 crop forecast to 55.0 million tonnes from 53.9 million, still slightly below last year’s output of 55.4 million tonnes.

“The wheat and barley harvests are arriving late this year but yields are expected (to be) good, with exceptions in a few places in Central Europe,” Strategie Grains said in a report.

The hefty wheat and barley crops, along with larger expected international demand, would benefit EU shipments this season, it said.

Strategie Grains now expects EU soft wheat exports this season at 31.0 million tonnes, up from 28.6 million tonnes forecast last month and 26.9 million tonnes in 2020-21.

Barley exports were seen at 7.2 million tonnes, up from last month’s projection of 6.7 million tonnes and close to last season’s 7.3 million tonnes.

A cut in expected production in North America and the Middle East and Turkey means that the EU will need to mobilize its entire exportable supplies to meet global demand, Strategie Grains said, even with Russia potentially selling more than 40 million tonnes.

Chinese import demand is expected to remain high in 2021-22, though slightly lower than last season, which should support French exports, it said.

Strategie Grains also lifted its estimate for the bloc’s maize crop, usually harvested in the autumn. The crop is now seen at 65.7 million tonnes, up from 65.3 million tonnes.

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It also lifted its EU 2021 barley and maize crop outlook, supported by good weather conditions.

“Since last month, our forecast for EU-27 soft wheat exports has increased by 1.6 million tonnes to reflect the very good competitiveness of Bulgarian and Romanian wheats and, to a lesser extent, Baltic, German and Polish wheats on early 2021-22 contracts,” Strategie Grains said.

Strategie Grains expects 2021 EU soft wheat production at 131.1 million tonnes, up from 129.6 million in May and 119.4 million last year.

EU soft wheat exports in 2021-22 were now pegged at 28.6 million tonnes, up from 27.0 million projected last month.

That was now well above the 26.9 million tonnes EU wheat exports projected for this season, an estimate that was lowered by 600,000 tonnes this month. The consultancy did not give a reason for the change.

For barley, Strategie Grains lifted its estimate for the 2021 EU harvest by 300,000 tonnes to 53.9 million tonnes.

It slightly raised its forecast of EU maize production by 100,000 tonnes to 65.3 million tonnes.

“The start of the maize development cycle was sluggish but plant growth is now taking place amid good conditions almost everywhere,” it said.

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In a monthly oilseed report, the French firm reduced its outlook for this year’s rapeseed harvest in the 27-country European Union to 16.8 million tonnes from 17.05 million forecast last month.

In March, it had trimmed its forecast by 90,000 tonnes.

The latest 2021 production outlook would be 3.4 per cent above a poor 2020 crop of 16.25 million tonnes.

This month’s downward revision mainly reflected the factoring in of a reduced official German estimate of rapeseed area, said Hemeline Macret, Strategie Grains’ oilseed desk manager.

A limited recovery in harvest output could keep EU supply low at a time when soaring prices for oilseeds and vegetable oils have encouraged processors to scoop up available stocks.

Rapeseed crops endured another drought-affected sowing campaign, notably in France.

The oilseed is now facing late frosts in western Europe as plants enter the crucial flowering stage. Parts of France registered record lows for April early on Tuesday at between -4 and -7 C.

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Moscow will apply a 25-euros- (US$30.57-) per-tonne tax on wheat exports from Feb. 15 until the end of the marketing season on June 30 as part of efforts to stabilize domestic food prices. While the consequences of the tax are still unclear, traders and analysts expect a drag on Russian shipments.

“There is little availability for the EU to export much more wheat than already projected and the export demand that Russia risks losing will therefore need to transfer onto Australian and/or Argentinean wheat instead,” Strategie Grains said.

The French firm increased its monthly forecast for soft wheat exports from the EU and Britain in the current 2020-21 season to 24.7 million tonnes from 24.3 million.

That reflected a sharp increase to expected French shipments on sustained sales to China and renewed competitiveness in Algeria, which outweighed reduced competitiveness for German and Polish exports, it said.

Like other analysts, Strategie Grains has kept Britain in its EU supply-and-demand projections during the transition period since Britain’s exit from the bloc last January.

However, it also issued this month initial forecasts for next year’s harvest based on only the remaining 27 EU countries.

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In a monthly cereal report, the French analyst lowered its estimate of 2020 soft wheat production in the EU plus Britain to 130.9 million tonnes, down two million tonnes from its May forecast and now 11 per cent below last year’s output.

Wheat crops in northwest Europe endured soggy conditions during autumn and winter, which curbed sowings, before suffering from spring drought.

“The rapid changeover from one extreme of the climatic spectrum to the other does not bode well for this summer’s harvests,” Strategie Grains said.

“Admittedly, the fall in the mercury and increased rainfall at the start of June is beneficial in terms of grain filling – but much of the damage is irreversible,” it said, referring to wheat.

Strategie Grains made a similar-size cut to its EU soft wheat harvest forecast last month and has lowered its outlook every month since its initial projection of 140.5 million tonnes in December.

This month’s cut included a one-million-tonne decrease in expected French production, now seen at 32 million tonnes.

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The barley market rallied earlier in the 2018-19 season with weather-hit crops in Europe and Australia expected to contribute to a fall in global stocks, which the U.S. government sees hitting a 35-year low.

However, competition from cheaper maize (corn) for use in livestock feed and a lull in demand from major importers China and Saudi Arabia hit barley prices, including in Australia where severe drought cut the country’s export surplus, French-based Strategie Grains said.

“The very high price of barley through the first half of the (export) year has led to a reduction in global demand and in turn this has now generated a price war between the main barley exporters on the world market,” Strategie Grains said in a monthly report.

The dampening effect on demand from high prices has been exacerbated by a Chinese anti-dumping probe into barley from Australia, its main supplier, and rainfall in Saudi Arabia that could boost local pastureland, the firm said.

Barley prices in the European Union and Argentina shed between $15 and $20 a tonne in the past month, tracking a slide in Australian prices, it said (all figures US$).

Strategie Grains lowered its forecast for EU barley exports in 2018/19 to five million tonnes from 5.8 million last month.

Downward pressure on prices could persist if China continues to shun Australian crops and Saudi Arabia further delays its return to the market. Favourable prospects so far for 2019 harvests in Europe and the Black Sea region may also bring supply pressure next season, it added.

In contrast, export prospects for EU wheat this season were improving due to declining availability and rising prices in the Black Sea zone and also in Argentina.

Strategie Grains increased its forecast for EU soft wheat exports, excluding durum, in 2018-19 to 18.7 million tonnes from 18.5 million.

However, like barley, global demand for wheat has been constrained by cheaper maize, a trend that could continue next season despite expectations for a recovery in wheat demand as production rebounds.

For 2019 EU production, Strategie Grains left its forecast of the common wheat crop unchanged at 146.4 million tonnes, a 15 per cent increase from last year, and increased slightly its barley crop forecast to 62 million, up 11 per cent from 2018.

— Reporting for Reuters by Gus Trompiz and Valerie Parent.

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