Disappointing European corn and wheat crops are adding to
the upward pressure on world cereals prices, Strategie Grains said, slicing
its production estimates for both grains.
The influential analysis group said that European Union and
world corn prices had potential to increase to render the grain "less
attractive to users" given supplies continued to be diminished by poor weather.
Strategie Grains slashed its estimate for the EU corn crop by
4.3m tonnes to a five-year low of 53.5m tonnes, noting that "dry, hot
conditions persisted in central and southern Europe through August, disrupting
grain filling for the maize [corn] plants.
"We now expect significant acreage losses. The true extent of
these will become clearer as the maize harvests progress."
Second downgrade in
Hopes were cut for a swathe of countries, including
Bulgaria, Hungary and Romania in eastern Europe, and Austria, the Czech
Republic and Italy further west.
The revised EU-wide harvest figure implies a 19% drop in corn
production this year from last year's bumper crop, necessitating a sharp rise
in imports, to 8.2m tonnes.
It also takes Strategie Grains' estimate 3.8m tonnes below that
of the US Department of Agriculture, which on Wednesday sliced its forecast for the EU harvest, the world's fourth-biggest, citing "excessive heat and moisture
'Very bullish oulook'
Strategie Grains also flagged the potential for further
rises in wheat prices, slicing its estimate for the EU crop, the globe's
largest, by 1.7m tonnes to 123.6m tonnes, and highlighting the need to ration
While cutting by 1.3m tonnes, to 15.1m tonnes, its forecast
for EU wheat exports in 2012-13, the gruop acknowledged that this figure too appeared
optimistic, requiring a drawdown in inventories to some 8.5m tonnes, below the
11m-tonne level levels considered the pipeline minimum.
Strategie Grains EU grain forecasts, change on last and (year on year)
Soft wheat: 123.6m tonnes, -1.7m tonnes (-2.5%)
Durum wheat: 8.0m tonnes, unchanged, (-1.2%)
Corn: 53.7m tonnes, -4.4m tonnes, (-19.1%)
Barley: 53.5m tonnes, +0.4m tonnes, (+3.3%)
Total grains (includes others): 270.5m tonnes, -4.4m tonnes, (-5.1%)
"The outlook for all world grain prices remains very
bullish and this will accentuate the potential for EU wheat prices to increase,"
the Paris-based group said.
Some other forecasters, including Macquarie, have said that
Paris wheat futures look set to outperform those in Chicago, given the need to
ration exports from the EU, the natural alternative for importers seeing Black
Sea supplies dry up after poor harvests.
Strategie Grains said that its cut to the EU production
forecast reflected "low yields" in eastern Germany, and "disappointing" ones in
northern France, with rain cutting further prospects for Irish and UK crops.
The comments follow a downgrade by FranceAgriMer to its
forecast for the French crop, although the official farm bureau forecast the
crop would be sufficient to support higher exports in 2012-13.
Including durum, the EU wheat crop will come in at 131.6m
tonnes, a 3.7% drop year on year, Strategie Grains said.
The USDA on Wednesday, in its monthly Wasde crop report, pegged the bloc's all-wheat output at
Strategie Grains' upbeat comments on grain prices followed hours after Goldman Sachs said it was positive on prospects corn and wheat futures, despite some apparently "bearish" revisions in the Wasde briefing.