FO Licht has lowered the bar further on the global wheat harvest, thanks to lower expectations for Canada's crop and a deep cut to its forecast for French production.
The German commodity group cut its estimate for the world crop to 656.4m tonnes, saying that "negative weather conditions in numerous key areas reduce yield outlook".
The figure is more than 4m tonnes below the US Department of Agriculture figure released on Friday, and also below estimates from the International Grains Council and Australia's Abare commodities bureau.
The crop in Canada, where farmers were prevented by a wet spring from completing sowings, saw the biggest revision, down 4.1m tonnes to 20.0m tonnes. That left Licht's estimate 500,000 tonnes below the USDA's.
France vs Germany
However, Licht also slashed by 2.2m tonnes to 37.3m tonnes its forecast for the French harvest, amid some debate among investors about the extent to which the crop in the European Union's biggest producer, and in some neighbouring countries, has been damaged by dry weather.
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FO Licht 2010-11 wheat estimates, change on June, (yr-on-yr change)
French output: 37.28m tonnes, -2.22m tonnes, (-5.3%)
UK output: 16.00m tonnes, -200,000 tonnes, (+11.1%)
Total EU output: 139.37m tonnes, -2.37m tonnes, (unchanged)
Russian output: 56.00m tonnes, -1.00m tonnes (-9.2%)
US output: 60.00m tonnes, +4.50m tonnes, (-0.6%) |
Strategie Grains, the Paris-based analysis group, last week cut its forecast for the French harvest by just 100,000 tonnes, while axing more than 1m tonnes from its estimate for the crop in Germany, the EU's second-biggest producer.
Licht analysts, meanwhile, based in the northern town of Ratzeburg, left its forecast for Germany unchanged at 24.9m tonnes
The forecast for the overall EU wheat crop was lowered by 2.4m tonnes to 139.4m tonnes, more than 2m tonnes below the USDA estimate.
Chinese heat
The comments came as European wheat prices continued a mild decline from recent highs, closing E0.75 lower at E160.25 a tonne in Paris, for November delivery, and down £0.50 at £118.50 a tonne for London's November contract.
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Forecasts for world 2010-11 wheat crop (estimate for 2009-10)
USDA: 661.07m tonnes (679.85m tonnes)
IGC: 664m tonnes (677m tonnes)
Abare: 658m tonnes (675m tonnes)
FO Licht: 656.37m tonnes (674.92m tonnes) |
Indeed, Licht highlighted that the supply and demand fundamentals for corn looked "much more bullish" than for wheat, of which there are deep stocks after strong harvests in 2008 and 2009.
Wheat exporters still faced "stiff competition" this season.
For corn, sowing estimates had been lowered in the US and "hot conditions are stressing the crop in China", Licht analysts said.
They left their estimate for Chinese production at 159.0m tonnes, a figure 7.0m tonnes lower than the USDA forecast.
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