Strat Grains, USDA upgrade EU wheat crop forecasts

Ideas of a strong European Union wheat harvest received a double boost when both Strategie Grains and the US Department of Agriculture lifted crop estimates, after benign summer weather,

Strategie Grains raised by 1.3m tonnes to 143.6m tonnes its forecast for the EU wheat harvest, the world's biggest, its fourth successive monthly upgrade.

The figure - which includes 8.1m tonnes of durum wheat, the type used in making pasta - took nearly to 10m tonnes the rebound in output from last year, when European production was dented by a cold winter and, in north western areas, an unusually wet spring and summer.

The revision came shortly before the USDA lifted its forecast by 1.5m tonnes to 142.9m tonnes.

Quantity and quality

Indeed, ideas market-wide have been improving on the European harvest after weak starts in the top two producers, France and Germany, gave way to better results.

France's farm ministry on Monday raised its estimate for the domestic harvest by 900,000 tonnes to 37m tonnes.

The UK crop, the third biggest - which after a dismally wet autumn and winter, and cold spring had been expected by some analysts to fall to 11.5m tonnes or less is now generally seen exceeding 12m tonnes. The USDA upgraded its forecast to 12.1m tonnes.

And the rapid harvest, in limiting the exposure of ripe grain to rains and the risk of sprouting, has boosted quality hopes too, with Strategie Grains highlighting that, as of last Friday, the EU harvest was complete apart from in the UK and Scandinavia.

Macquarie earlier this week flagged the quality of the EU crop earlier this week as it upgraded its estimate for the harvest to 142.2m tonnes, including 134.2m tonnes of soft wheat of which 93.1m tonnes was viewed as of milling grade.

Last year, the EU produced 91.6m tonnes of milling wheat, in 2011 84.5m tonnes and in 2010 70.0m tonnes, according to Macquarie.

Corn downgrade

Strategie Grains also lifted its estimate for the EU barley harvest, by 800,000 tonnes to 59.1m tonnes, up 4.4m tonnes year on year.

However, the group lowered by 1.7m tonnes its forecast for the corn harvest, albeit still leaving the crop, at 64.0m tonnes, above the 57.7m tonnes reaped last year.

The dry summer which has supported wheat quality has lowered corn production prospects, particularly in central European countries such as Hungary, for which Strategie Grains lowered its harvest estimate by 1.2m tonnes.

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