Crop monitor cuts EU winter grain outlook again on dry weather

PARIS, July 23 (Reuters) – The European Union’s crop monitoring service, MARS, cut its forecast of EU 2018 winter crop yields again on Monday, citing exceptionally dry and hot weather in north and central Europe with little relief in sight.

Mounting concern about the size of the European harvest, notably in Germany, combined with prospects of a lower crop in Russia, has sent global wheat prices rallying in recent days with Paris-based wheat futures hitting contract highs.

“Water stress, associated with exceptionally dry and warmer-than-usual conditions, affected the flowering and/or grain filling of winter crops and spring cereals in large regions of northern central and northern Europe,” MARS said in a monthly report.

The unit cut its winter and spring cereal yield forecasts for practically all northern and central European countries, including major producers Germany and Poland.

MARS estimated the EU 2018 yield for soft wheat, the most produced cereal in the bloc, at 5.82 tonnes per hectare (t/ha), down from 6.04 t/ha last month. This was now 4.9 percent below 2017 and 2.6 percent under the five-year average.

In Germany, which suffered the hottest spring weather since 1881, market operators were still trying to assess the volume of the crop as harvesting spreads northwards to areas which have suffered most from the dry weather.

MARS estimated the German soft wheat yield at 7.1 t/ha, down from 7.75 t/ha pegged last month, while the Polish yield would fall to 4.27 t/ha from 4.72 t/ha in June.

The unit kept its poor outlook for France unchanged, in contrast with some consultancies such as Agritel and Strategie Grains which recently slashed their crop estimates for the EU’s largest wheat producer.

EU yield forecasts are now below five-year averages for all winter cereals considered, as well as spring barley and rapeseed, MARS said.

MARS cut its forecast of the EU 2018 barley (winter plus spring) yield to 4.74 t/ha, from 4.98 t/ha last month and 4.89 t/ha last year.

For grain maize, the unit raised its forecast for the EU 2018 yield to 7.64 t/ha from last month’s 7.35 t/ha as the crop benefited from abundant rain in southern Europe.

For rapeseed, MARS cut its forecast of the EU 2018 yield to 2.89 t/ha from 3.05 t/ha last month, now 12 percent below last year when the crop was at a five-year average.

In sugar beet, MARS slightly raised its EU 2018 yield forecast to 77.9 t/ha from 77.5 t/ha last month as an upward revision for France was counterbalanced by a downward revision for Germany, the Netherlands and the UK, it said.

Weather conditions should remain warmer than usual in most of Europe in the coming days and should generally prevail in the following months, MARS said in its weather forecasts.

“The long-term weather forecast for August-September-October shows warmer-than-usual conditions are very likely to occur in the eastern Mediterranean and the Baltic regions, likely in the central Mediterranean region, northern and northeastern Europe and more likely than not in the rest of Europe,” it said.

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