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Strat Grains lifts bars on hopes for EU wheat crop

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Strategie Grains raised the bar on ideas for the European Union wheat harvest, reflecting upgraded hopes for countries from the UK to Bulgaria, but reduced expectations for barley, citing dryness in France and Spain.

The influential analysis group lifted by 2.0m tonnes to a six-year high of 147.0m tonnes its forecast for the EU's wheat harvest, the world's biggest, this year.

The revision - down to improved hopes for the soft wheat crop, upgraded to 139.4m tonnes - lifted the estimate well above that of the International Grains Council, which is forecasting a 144.9m-tonne harvest, while putting Strategie Grains back above the US Department of Agriculture too.

The USDA last week raised its forecast by 1.37m tonnes to 146.25m tonnes.

Indeed, Thursday's upgrade is the latest of a series for the crop, with the EU's official crop monitoring unit, Mars, yesterday lifting its forecast for the bloc's soft wheat yield to 5.81 tonnes per hectare.

Spain vs the rest

Strategie Grains, which raised its yield forecast by 0.1 tonnes per hectare to 5.8 tonnes per hectare, attributed its upgrade to improved productivity for crops in a range of countries, including France, Germany and the UK, the bloc's top three growers, citing benign weather.

Indeed, conditions for crop development "were very good everywhere in Europe during May except Spain, where drought has sharply reduced yield potentials," the Paris-based group said.

However, a 500,000-tonne downgrade to combined expectations for Spain and Croatia only in part offset a 2.5m tonnes increase to forecasts for other EU countries.

That said, rainfall which in many countries had boosted grain-filling, including in north east France where dryness had been raising concerns, had also provoked some concerns over crop quality in some south eastern EU countries, including Italy and Romania.

The concerns over Romania, a notable force in wheat exports, have reached US markets, with Minnesota-based broker CHS Hedging saying that "some areas are expecting losses due to excessive moisture in the Danube river plains".

Barley downgrade

The dryness in Spain has dented more EU barley hopes, with the country a big grower of the grain, typically producing more than it does of wheat.

Downgrades for barley output in Spain, as well as parts of France, led a 500,000-tonne cut to 55.5m tonnes in the Strategie Grains forecast for the bloc's barley harvest.

The IGC pegs the harvest at 56.0m tonnes, while the USDA sees it at 55.88m tonnes.

Strategie Grains estimated the overall EU grains harvest at 300.7m tonnes, an upgrade of 900,000 tonnes, but still behind last year's 302.3m tonnes.

By Agrimoney.com

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