Rain this summer coupled with drought in the spring is expected to lead to smaller wheat crops this year in major west European producing countries, analysts and traders said on Thursday. "It is not a disaster but the big producers, especially France and Germany, seem to be heading for lower crops," one German analyst said.
"Supplies in the new season will be sufficient but not abundant. It looks like Europe will not produce a large crop." European wheat prices have jumped to record levels this month. French new crop wheat November futures hit a new high on Thursday of 227.00 euros, up from 161 euros at end-May.
"Rising wheat prices have largely been caused by concern about the tight international supply picture," a trader said. In France, Europe's leading wheat producer, unfavourable weather ranging from severe dryness in April to heavy rain in June have reduced the outlook for crop size and quality.
The French farm ministry on Thursday cut its estimate for the country's 2007 soft wheat crop to 32.9 million tonnes, down from 34.7 million seen last month. Others were more pessimistic.
"The latest information has confirmed our estimate last week of 32.3 million tonnes," said Michel Portier, analyst at Agritel, referring to the lowest published estimate this year. In Germany, Europe's second largest wheat grower, widespread rain just as harvesting started brought fears of quality damage. Analysts said they expected Germany's wheat crop to be at least ten percent below 2006's 22.3 million tonnes.
Estimates ranged between 19.8 to 20.1 million tonnes, although most expected a crop under 20 million tonnes. The final areas to be harvested include two of the largest production areas, Lower Saxony and Schleswig-Holstein in north Germany, both highly important regions for German wheat exports.
In Britain the outlook is also poor with a smaller wheat crop expected than last year's 14.7 million tonnes and quality damage expected following heavy rain this summer. Observers have reported yields in some areas down about 10 percent, a trend which if continued through the rest of the harvest, could see production dip below 14.0 million tonnes despite a rise in plantings of about two percent this year.
Italy, one of Europe's major grain buyers that covers about half its grain needs with imports, would probably have to import more high quality wheat abroad after domestic crops' quality was hit by unfavourable weather, observers said. Italy's soft wheat crop was almost unchanged at 3.2 million tonnes this year, according to farmers body Coldiretti and research centre ISMEA but the quality level was still unclear.