Bumper crops and slumping exports could leave Europe's grain stocks one-third bigger than current forecasts at the end of the 2009-10 marketing year, a report by US foreign staff has said.

A briefing from US Department of Agriculture staff in London, posted as Washington prepares updated forecasts on global crops, has pegged the European Union's grain inventory at 43.1m tonnes as of the end of next June, 10.7m tonnes higher than the current estimate.

Besides surprisingly high levels of hoarding following last year's bumper crop, the increased estimate reflected lower hopes for exports, which the report put at 22.8m tonnes, down 26% year on year.

"The EU is expected to see stiff competition from the Black Sea on [barely] export markets," the report said, noting large crops in Middle Eastern importing countries.

Official US forecasts currently see EU grain shipments falling 16.5% to 25.3m tonnes.

East vs west 

"Specifically, higher-than-anticipated yields in France and Germany mean the total wheat crop is now estimated to be 138m tonnes, 3m tonnes up on two months ago," the briefing said.

The quality of the crop appears to be "similar to last year: fair in the west but poor in the east", the note added, highlighting that insect infestation and harvest rains had hurt the condition of the Romania's wheat.

Barley had showed a similar pattern, with "grain quality is reported to be particularly good in France and Germany but poor further east".

Sagging prices

The report comes amid a flurry of reports of bumper northern hemisphere grain crops, with the Czech Republic, France and Ukraine this week raising harvest forecasts.

Paris November lot stood at E121.25 a tonne in afternoon trade on Thursday, down E0.25 on the day but E0.25 above Wednesday's contract low.

London wheat for November stood at £92.25 a tonne, unchanged on the day and £0.75 above Wednesday's 2009 low.

The USDA will on Friday reveal updated estimates for global crop supply and demand.