Bigger harvest to lift EU wheat stocks by 40%

The world's biggest wheat harvest, the European Union's, is to rise this year, lifting inventories by 40%, despite damage from cold weather in many areas, and a threat from a drought in Spain.

The European Commission, in its first estimate for this year's harvests, pegged the soft wheat crop at just under 133m tonnes, a rise of 3.2m tonnes over the 2011 result.

The forecast reflected ideas of an above-average yield, of 5.7 tonnes per hectare, which would be the best result in four years, despite setbacks from cold earlier this month.

Official researchers had warned that "frost kill can be expected for Western and Eastern Europe due to the severe cold spell", the commission said in a thrice-yearly report, placing crops in the east of France, the EU's top wheat-producing country, second-ranked Germany and fourth-placed Poland as particularly likely to show losses.

"The mild winter conditions before [the freeze] prevented winter cereals partially from hardening, and consequently they are vulnerable to frost kill."

Furthermore, dryness in parts of Portugal and Spain, which have seen rainfall of 20-50% of normal levels since November, was "another weather condition of concern", the briefing said.

Soaring inventories

Crop prospects were also being helped by extra sowings, with growers having planted an extra 113,000 hectares with the grain, taking total area to 23.3m hectares.

EU soft wheat estimates, 2012-13, and (year-on-year change)

Area: 23.332m hectares, (+0.5%)

Yield: 5.70m tonnes per hectare, (+2.0%)

Production: 132.984m tonnes, (+2.5%)

Total domestic consumption: 116.1m tonnes, (-1.8%)

Incl. milling use: 47.5m tonnes, (-0.6%)

Exports: 15.0m tonnes, (unchanged)

Year-end stocks: 15.1m tonnes, (+41%)

Source: European Commission

Indeed, this area was larger than the 23.0m hectares forecast two weeks ago by Strategie Grains, the influential Paris-based analysis group, which pegged the EU's soft wheat crop this year at 132.7m tonnes.

The extra production will lift Europe's wheat inventories at the close of 2012-13 to 15.7m tonnes, the highest for at least four seasons, with consumption falling.

Use by livestock farms will fall, while growth in wheat demand by ethanol plants will slow to 4.3%, one-third of the pace of the year before.

The region's top wheat-ethanol plant, the UK-based Ensus factory, remains mothballed, although a similarly-sized site in northern England is set to open around May.

Rapeseed supplies

The report forecast a smaller rise in the size of EU stocks of grain overall in 2012-13, with the rise in wheat supplies partially offset by decreases expected in barley and corn, of which livestock farms are expected to raise consumption.

EU rapeseed estimates, 2012-13, and (year-on-year change)

Production: 20.2m tonnes, (+4.8%)

Total domestic consumption: 43.8m tonnes, (+0.5%)

Imports: 2.5m tonnes, (-16.7%)

Exports: 0.2m tonnes, (+50%)

Year-end stocks: 1.0m tonnes, (unchanged)

Source: European Commission

End-of-season grain inventories will rise 600,000 tonnes to 37.4m tonnes, a three-year high but well below levels seen in 2008-09 and 2009-10.

For rapeseed, carry-out stocks will remain at below-average levels of 1.0m tonnes, with the boost from a bigger harvest offset by rising demand and a cut in imports.

Offre & Demande Agricole last week forecast rapeseed production in Ukraine, a major exporter to the EU, tumbling by up to 37% from the 1.43m tonnes achieved last year.

Spate of data

Monday's estimates are the latest in a series of forecasts for major grain producers in 2012-13, with only Ukraine, among major producers, so far seen suffering heavy crop losses among.

The US Department of Agriculture on Friday forecast the American wheat harvest rising by 8.3%, enough to lift carry-out inventories by 13%.

On Thursday, the International Grains Council forecast world wheat production of 680m tonnes, a drop of 15m tonnes year on year, but a harvest big enough to cause "only a modest decline" in global stocks over the season.

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