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French, UK wetness leave EU facing drop in wheat area for 2020

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Strategie Grains ditched expectations of a, small, rise in European Union soft wheat area for next year’s harvest, citing wetness which has hampered seedings in particular in the UK and buoyed London futures.

 

The influential analysis group trimmed by 200,000 hectares to 23.7m hectares its forecast for EU soft wheat area for the 2020 harvest.

 

The downgrade took the figure below the 23.8m hectares estimated for the latest harvest, although remains above the 2018 figure of 23.0m hectares.

 

Strategie Grains said that its revision “essentially stems from the wet weather delays to winter cereal drillings in the UK and to a lesser extent France, with farmers unable to plant in waterlogged fields”.

 

Price impact

The comments come amid persistent wetness which has prevented UK farmers from completing their winter crop sowings, with market estimates seen by Agrimoney that roughly 50% of crop is in the ground overall.

 

Some farmers Agrimoney has spoken too have yet to get any winter wheat in the ground, while even some growers who did manage sowings before rains set in in September are worried that inundated seed has rotted.

 

The prospect of a poor wheat harvest next year has spurred a marked revival in London wheat futures, which had been weighed by a bumper harvest, leaving the UK with 2.8m-tonne exportable surplus at a time when Brexit is clouding the prospects for shipments.

 

With the UK potentially seen as a net importer in 2020-21, London futures have outperformed, with the best-traded May 2020 lot up 10% since the end of August.

 

“The story is clear - we are facing a substantial reduction in the 2020 UK wheat harvest and the market is simultaneously trying to prevent exports from leaving our shores and encourage said old crop stocks to be held into new crop,” said Rupert Somerscales, ODA.

 

French slowdown

He highlighted too a move by November 2020 futures to a small premium over December 2020 futures in Paris wheat which, as a better-quality grain, typically holds the price advantage, which indeed stood at some £18 a tonne a month or so ago.

 

French sowings themselves have been held up too in some areas by rains, with FranceAgriMer pegging seedings progress as of a week ago at 72%, up 5 points week on week, but down 20 points year on year.

 

Indeed, it was the slowest on data going back to 2011, behind the 84% figure record for that date in 2014.

 

Production potential

“The sowing of winter wheat is making noticeably slower progress in France this year,” said Commerzbank, although seeing the potential for some yield benefit ahead from the rains.

 

“Even if wheat crops are now lagging behind last year in terms of their development, good soil moisture levels can prove very beneficial later on.”

 

Strategie Grains said that modelling based on long-term yield trends suggested an EU soft wheat output of 142.3m tonnes next year, compared with a 2019 result of 145.5m tonnes.

 

Barley, corn outlook

While there remains a little time yet for French and UK winter wheat sowings to be completed, and with a somewhat drier forecast ahead, Strategie Grains flagged the potential for acreage to be switched to spring crops.

 

It raised its forecast for overall barley area for the 2020 harvest by some 200,000 hectares to 12.0m hectares, although that is still below the 12.2m hectares estimated for the latest crop.

 

The 2020 barley crop was pencilled in at 59.6m tonnes, down 2.0m tonnes, with maize output pegged at 64.8m tonnes, 1.3m tonnes above the forecast for the ongoing 2019 harvest.

 

Maize area next year was put at 8.8m hectares, up a bit over 100,000 hectares year on year.

 

Barley price pressure

 

Separately, the AHDB bureau said that the "current perception is that farmers may switch some of their winter cropping into spring barley", flagging the potential for pressure on prices, especially with supplies boosted by a 2019 harvest which was the strongest in more than 30 years.

 

"Considering the UK barley supply from 2019 harvest is significant, such a switch [to spring barley] would further pressure UK barley prices.

 

"The need to remain export competitive in barley markets continues."

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