BRUSSELS, BELGIUM — E.U. cereal production reached a new record level in 2014-15 thanks to favorable climatic conditions, bringing stocks back to comfortable levels and allowing for huge exports, according to the European Commission’s Winter 2015 Short-Term Agricultural Outlook published on March 9.
E.U. cereal harvest reached 327 million tonnes, which is 14% above average and 7% above 2013-14. Total cereal area increased by more than 1 million hectares from the 57.8 million hectares in 2013.
Good climatic conditions that included a mild winter, summer rain in southern areas and a lack of significant extreme events, led to very good yields, according to the report.
World cereal production exceeded for the first time in history 2 billion tonnes in 2014-15, according to the International Grains Council (IGC). World demand is expected at 1.976 billion tonnes, allowing ending stocks to reach a 30-year high of 431 million tonnes (21% stock-to-use ratio), the commission said.
In the E.U., corn (maize) yields increased 15% with the largest yield increases recorded in France (10.4 tonnes per hectare), Hungar (6.5 tonnes per hectare), and Bulgaria (6.4 tonnes per hectare).
With the increase, the quantity of corn produced in the E.U. might exceed internal use, leading to lower imports, while exports might remain stable, the report said.
The additional E.U. cereal production was also driven by significant increases in soft wheat and triticale area planted (8% increase for both), with sowing decisions supported by good prices during 2013-14. In addition, good climatic conditions led to an increase of E.U. soft wheat yield (8%).
E.U. production is therefore expected to rise by 13.6 million tonnes compared to 2013 with a contribution of close to 8 million tonnes coming from the five biggest producers; France, Germany, the U.K., Poland and Romania.
The record level in soft wheat production was partially offset by decreases registered for rye (-13%) and oats (-6%). For rye and oats the reduction in production is mainly driven by a decrease in area allocation by 19% for rye (driven by a large -25% in Poland) and 4% for oats.
The negative trend for durum wheat continued leading to a 4.2% decrease to the lowest level since 1997, 7.6 million tonnes, despite an increase of production in Italy (3.7%). Barley production decreased by 1% because of an almost 3% reduction in area, while the average E.U. yield increased by 2%. Large increases in production were reached in France (14%) and Germany (12%).
Barley also suffered from dry spring conditions in Spain that reduced yield by 31% compared to 2013 high levels and from a big area reduction in Poland (-30%).
For the marketing year 2014-15, cereal imports are expected to decrease by one third, while exports are projected again to increase reaching a new record at 44.3 million tonnes (close to 2% more than in the previous marketing year). The E.U. could therefore increase its trade surplus to 31.6 million tonnes (compared to 24.3 in 2013-14).
For the first 6 months of the marketing year 2014-15, the E.U. exported 15.4 million tonnes of wheat (700,000 tonnes more than previous record in 2013-14). Main wheat export destinations were North Africa (Algeria, Morocco, Egypt) and the Middle East (Saudi Arabia, Jordan, Iran). By contrast, durum wheat is mainly imported (2.2 million tonnes) from Canada (80%), the U.S. and
Maize imports are expected to reach below average levels in 2014-15, although the special import quotas granted to Ukraine were completely filled in 2014 for maize and wheat (not for barley). For the first part of 2015 (up to Feb. 20), the maize quota was filled immediately at 100% while wheat fulfilment reached 22.5%.
Large availabilities and decreasing prices on one side and a slightly increasing E.U. animal production on the other are pushing cereal use for animal feed 3.4% higher compared to the previous marketing year.
Final stocks for marketing year 2014-15 are expected to increase from 34.9 to 50 million tonnes bringing the stock-to-use ratio from 13% to 18%; stock-to-use ratios are expected to reach 12% for wheat (against 9% at the end of 2013-14), 20% for barley and 28% for maize.
Early forecasts for the 2015-16 harvest are showing a good level of cereal production at more than 300 million tonnes, a result of generally favorable weather conditions (mild winter and absence of higher than normal impacting frosts). First figures from member states indicate a decrease in soft wheat areas by 3.5% mainly in Poland (-15%).
By contrast, the number of hectares planted with barley is expected to increase by 1.5% and durum wheat by 3.5% (France 8% and Italy 3%). The latter is supported by voluntary coupled support and higher prices at the time of sowing.
Similar to cereals, the E.U. 2014 oilseed harvest is estimated to have exceeded its 2013 record, supplying the domestic market mainly with large quantities of rapeseed. While the planted area remained stable, a considerable yield increase of 14% was achieved due to the excellent growing conditions.
Germany, France, Poland and the U.K., the main E.U. rapeseed producers, showed considerable yield increases ranging between 14% and 25%. Domestic soybean production was also favorable
(up 19%) due to the combined effect of a larger planted area (9% increase in the E.U.-28) and a yield increase of 10%.
For the 2014-15 marketing year, the large domestic cereal and oilseed harvest, together with lower crude oil prices and Euro depreciation against the U.S. dollar, could drive reduced oilseed imports and increased domestic use and stocks. Due to the low crude oil price, crushing margins remain low, leading to lower oilseed imports, partially compensated by 2% higher meal imports. Imports of vegetable oils are likely to remain rather stable. Developments in seed and oil imports largely depend on crushing margins and biofuel consumption, which will remain under pressure.
With the start of the harvest in South America, meal prices could drop because of the record soybean harvest expected in Brazil and Argentina against a background of nearly stable US plantings. This would be positive for the livestock sector.
Early estimates for 2015-16 indicate a small increase in E.U. oilseed area (1%). Winter rape sowings reported by member states are slightly higher in the Czech Republic, Lithuania and France, stable in Bulgaria, while slightly decreasing in Romania. The mild winter until now should result in limited crop damage.
The full report is available here.