European farmers' switch from wheat to barley will prove even more severe than had been thought, Strategie Grains has said in a report which forecasts that the region's grain output will not, after all, rise this year.
The influential analysis group lifted its forecast for European Union soft wheat production this year by 380,000 tonnes to 133.7m tonnes.
The upgrade, which would take the crop to within 5% of the region's bumper 2008 harvest, reflects an increase to 22.9m hectares in Strategie Grains' estimate for plantings of the grain, following reports of stronger-than-expected sowings in Germany and Romania.
Germany's Federal Statistics Office last week pegged domestic winter wheat plantings up 90,000 hectares at 3.27m hectares, the highest since the country was reunited in 1990.
'Huge stocks'
However, wheat's growing popularity has come at the expense of barley, for which Strategie Grains trimmed its sowings estimate, and cut its production forecast by a further 500,000 tonnes.
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Strategie Grains wheat estimates, 2010-11 (year-on-year change)
Sowings: 22.9m hectares (+0.9%)
Production: 133.7m tonnes (+3.0%)
Yield: 4.5 tonnes per hectare (+1.8%) |
Europe's barley prices have remained pressed against intervention levels by huge stocks, which in France, the region's biggest grain producer, are on course to hit 3.9m tonnes.
That is nearly as high as inventories of wheat, of which France produces three times as much.
Agritel, the French consultancy, said last week: "Carry out stocks for feed barley [in 2009-10] will be huge", adding that it would take until June next year to clear them, even without fresh crop.
Currency effect
In the UK, the EU's fourth-biggest barley producer, prices have been further placed under pressure by the relative strength of the pound against a euro weakened by concerns over Greece's economy.
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Strategie Grains barley estimates, 2010-11 (year-on-year change)
Sowings: 13.0m hectares (-6.5%)
Production: 58.2m tonnes (-5.7%)
Yield: 5.8 tonnes per hectare (-2.2%%) |
"The feed barley market has dropped, not at the same pace as feed wheat, but values in most areas back to £75-£80 [a tonne] ex-farm," Hugh Schryver, at Glencore's UK grain arm, said.
"The euro's weakness doing nothing to help intervention levels which for so long have supported the price."
As of last Thursday, European farmers had tendered 2.9m tonnes of grain for intervention buying since the programme restarted in November, including 2.7m tonnes of barley.
More corn
Strategie Grains analysts pegged Europe's total grain crop at 292.0m tonnes, a small decline on their December estimate.
The figure is also marginally lower than the estimate for last year's harvest, which they raised to 292.1m tonnes thanks to a better corn crop than had been thought in Australia, France, Hungary, Portugal, Romania and Spain.
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