Unfavorable weather in the European Union has sharply reduced the prospects for wheat and barley crops, contributing to a potentially "explosive" global supply shortage for these crops, think tank Strategie Grains said.
In a monthly report, the French company lowered its forecast for soft wheat production in the 27 EU countries for 2021 by 1.5 million tons to 131.5 million tons.
Wet weather ahead of the harvest led to unsatisfactory yields in France and Germany, while high temperatures in June reduced yields in Poland and Northern Europe, Strategie Grains reported.
The revised forecast for the EU soft wheat harvest is, however, 12.7 million tonnes higher than last year's estimate by Strategie Grains.
While this is good news, is it enough to offset losses and increased demand?
The downgrade comes amid deteriorating crop prospects in other export areas such as North America and the Black Sea region.
Strategie Grains lowered its forecast for world wheat production, including durum, by 14 million tons to 750.3 million tons.
Despite high prices and the spread of the Delta coronavirus, global demand for wheat is expected to rise in 2021/22. This could help push stock-to-consumption ratios in major exporting countries to record lows since 2012/13.
The forecast for soft wheat exports from the EU in 2021/22 was raised by 1.7 million tons from last month to 32.7 million tons, despite the mixed quality of the crop in the EU, the company said.
The share of fodder for livestock in the soft wheat crop is expected to be higher than last year, reflecting the impact of heavy rainfall, the report said.
The forecast for barley production in the EU was reduced by 2 million tons compared to July to 53.0 million tons, which contributed to a decrease in the forecast for world barley production by 7 million tons, according to Strategie Grains.
According to Strategie Grains, the drought that has wiped out crops in Canada, a major exporter, has put the market in a "barley and wheat explosion", which puts additional pressure on corn to meet the demand for feed for livestock.
The forecast for corn production in the EU was raised to 66.3 million tons from 65.7 million tons in July. The rains boosted crops in France, Germany and Poland, offsetting drought-related drought prospects in Hungary, Romania and Bulgaria, the report said.