WASHINGTON, D.C. — In market year 2016-17, and for the second consecutive season, E.U.-28 farmers are expecting a grain crop of around 310 million tonnes, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) said in a April 1 report.
However, following a weather-related rise in wheat yields and significant decline in corn yields in market year 2015-16, this headline figure hides a much improved corn production number and reduced year-on-year wheat production. Indeed, if realized, the forecast E.U- 28 grain crop will be just 800,000 tonnes smaller than in market year 2015-16 and, following the record 327 million tonnes grain crop in market year 2014-15, will be the fifth E.U.-28 crop to surpass 300 million tonnes in a decade.
The record E.U.-28 wheat crop in market year 2015-16 at a time of increased global grain supplies has weighed on the E.U.-28 wheat market this season. Despite low prices, and an improved pace in recent weeks, a slow start to the season means wheat exports are lagging behind the record set in market year 2015-16, and are currently forecast to reach 31.5 million tonnes. The much reduced domestically available supply of corn has supported a switch to wheat in animal feed rations. However, even with industrial use of grain down 650,000 tonnes in market year 2015-16, total Food, Seed & Industrial (FSI) use is only marginally lower year-on-year. This means total E.U.-28 grain ending stocks in market year 2015-16 are currently forecast to rise 3.5 million tonnes to over 36 million tonnes.
With total domestic consumption forecast down just 800,000 tonnes in market year 2016-17, a decline in feed demand expected to be largely offset by increased FSI usage, it is only a combination of a slight decline in production and a marginally improved outlook for wheat exports that sees stocks falling just under 1 million tonnes through the year. Indeed, much will ultimately depend on the size and quality of the E.U. 28 crop.
Prospects are currently positive for the market year 2016-17 harvest, both in terms of size and quality. Plantings of the winter crops went very well across the E.U.-28 in good conditions. November and December was unusually dry in some parts of the E.U. and generally the winter has been mild.
Turning to the corn crop, with the record production and record yields achieved in market year 2014-15 being followed by an 18-million-tonne decline in production in market year 2015-16 and the smallest crop in five years, there is much interest in the corn crop in market year 2016-17. While it was the dry, hot weather across much of the central and southern E.U. 28 in the months leading up to harvest in 2015 that so reduced the average yield, and remains a significant risk factor in any crop year, there is still a strong focus on the planted area.
Market year 2015-16 has been characterized by a record wheat crop, the size of which has become increasingly evident as the season progressed and countries confirmed higher than previously forecast yields, and a drought affected corn crop which hit a five year low immediately after a record high. Despite the latter, the domestic E.U. 28 grain market was well supplied and, with global grain markets also buoyant, this has weighed on E.U. 28 prices.