EU, UK Expect Big Wheat Crop Amid Quality Concerns
Wheat production in the European Union and Britain is set to rebound this year as the crop area and yields recover from weather woes the previous growing season, a Reuters poll showed.
But the rain that has benefited European crops since spring was now creating concern about harvest quality and raising a question mark over export prospects, traders and analysts said.
The 27-country EU is expected to harvest 130.4 million tonnes of common wheat - or soft wheat - in 2021, up 11% from last year, according to an average of 10 forecasts in the poll.
For the EU plus Britain, output will rise 15% to 146.2 million tonnes, an average of eight estimates showed. Britain's production is seen rebounding by about 50% from last year's crop that suffered from bouts of heavy rain.
'High Harvest Volume But Quality Issues'
The EU, collectively one of the world's largest wheat growers and exporters, could see "high harvest volume but quality issues," Vincent Braak of Strategie Grains said.
In top EU wheat producer France, good yields are expected but, as in Romania, frequent showers at the start of summer may trim grain quality.
A clear harvest picture might not emerge for several weeks in Europe as crop development is generally slower than usual and the start of harvesting in France was delayed by the wet weather.
Quantity And Quality
Early reports from harvesting in southeast Europe were still indicating strong yields, supporting expectations of bumper crops in Romania and Bulgaria, traders and analysts said.
Higher production is also anticipated in Germany, the EU's No. 2 wheat producer, with recent rain seen benefiting crops that are harvested later than in France.
Ample EU supply could be an export boon, with Russia's capacity to offload its large expected harvest curbed by its variable export duty, currently about $40 a tonne.
"A $40 barrier to export does change the Russian market dynamics, helping the EU to capture demand," one European trader said.
A shortfall in high-protein spring wheat from drought-hit North American and Central Asian growing belts could also bolster demand for European wheat, if harvest quality is satisfactory.
Quality specifications like protein content determine wheat's suitability for flour milling and access to export markets.
"High-protein wheat from the Baltics, Poland, Germany and the south of France could build a huge premium in the coming weeks," Braak said.
Demand for lower-quality wheat in livestock feed may be strong too as corn prices remain high.
China has already booked a large amount of French new crop for feed use and mixed harvest quality might encourage the trend.
But soaring shipping costs could keep EU wheat exports focused on closer destinations, including main outlet Algeria, traders said.