WASHINGTON, D.C., U.S. —Dry weather conditions prevailing throughout the winter grains crop cycle, along with warmer-than-average spring temperatures have driven down yield expectations in Spain. Overall grain production is projected to be below historical average levels. The strong demand by the domestic livestock industry, along with limited pasture availability will contribute to increase the country’s grain import needs, according to a June 2 report from the Foreign Agricultural Service (FAS) of the U.S. Department of Agriculture (USDA). Changes in the feed formula along with stock use may partially alleviate the grain shortfall.

In the report, the USDA said showers in May came in late for the large majority of the grain producing regions. Spanish harvesting operations start in late May to early June in the southernmost grain growing areas. Part of the grain crop is being harvested for hay or used as pasture, which further reduces grain yielding potential.

Area planted to corn is projected to continue to decline for the fifth consecutive year due to poor margins, irrigation water restrictions in some river basins, and to a lesser extent, by crop diversification established by European greening requirements, the USDA noted.

Spain_Grain production_Drought report
Spain’s winter grain production estimates (1,000 MT).
Source: MAPAMA data and FAS Madrid estimates.
Total wheat plantings were reduced in market year 2017-18. Durum wheat area has declined as the price differential to soft wheat does not cover the higher crop cost. According to the USDA, barley and soft wheat area is also trending down, due to competition from tree crops, in particular new olive grove plantings in Southern Spain, but also by tree nut plantings in the Spanish central plateau. The so-called minor grains (oats, triticale, rye) area continues to grow for the third consecutive year, most likely as a consequence of greening compliance implementation.

“Depending on the size of the domestic grain crop, the livestock sector demand and the price relations between the different ingredients comprising the feed formula, Spain has an annual grain deficit of between 9 million tonnes and 12 million tonnes,” the USDA said. “Even in years when domestic grain supplies are ample, the Spanish grain production is not sufficient to meet the country’s needs for feed, food or biofuels.”

On top of the sharp production decline anticipated, the limited pasture availability will result in increased import needs compared to the previous season. Consequently, Spain will be forced to import in market year 2017-18 a significant amount of grains to meet its shortfall. However, lower grain prices throughout market year 2016-17 encouraged farmers to build up stocks, the USDA noted. In light of poor crop expectations for market year 2017-18, domestic grain sale operations have slowed down, as old-campaign stocks are being stored, which partially will make up for the new season’s shortage.

As far as the composition of the feed formula is concerned, the bumper crop registered in market year 2016-17 allowed for an extensive use of domestic wheat and barley and still permitted stocks being built, the USDA said. As the aftermath of the short crop anticipated for market year 2017-18, Spanish livestock growers will be feeding significantly less barley to their animals. Increased corn imports and, to a lesser extent higher wheat imports, will offset the production decline.