The European Union faces higher stockpiles of grains next season as cereal production is expected to rebound after last year's drought-damaged harvest, outpacing rising demand, Strategie Grains analysts said.
In a monthly report, Strategie Grains trimmed its forecast of 2019 EU production of soft wheat, the bloc's main cereal crop, by 600,000 tonnes to 146.4 million tonnes, but this was nonetheless up 15 percent from 2018.
It also anticipates an 11 percent increase in barley production and a 4 percent rise in maize output, assuming the absence of extreme weather like last year, when parts of Europe endured record temperatures and prolonged drought.
Other crop experts anticipate a sharp rise in EU cereal production in 2019 due to a recovery in yields and a shift in sowings to cereals from rapeseed. "We do not yet forecast that cereal use in animal feeds or exports will be sufficiently high to provide outlets matching the scale of the large potential harvests on the horizon," French-based Strategie Grains said.
"Hence the outlook for cereals in the EU is bearish for 2019/20." In supply-and-demand projections for the 2019/20 season, which starts in July, the firm's analysts projected EU soft wheat exports had potential to rise by at least 6 million tonnes from an expected 2018/19 volume of 18.5 million tonnes, in order to meet strong overseas demand.
They also saw scope for greater industrial demand for cereals within the EU, notably due to higher use of crop-based ethanol fuel and rising starch production. However, to absorb more of the expected large harvest, wheat and barley would need to draw additional demand from livestock feed makers by becoming more price competitive against imported maize, it said.
Maize imports into the EU were currently expected to ease next season from a projected record level in 2018/19 but were seen remaining at a high level, Strategie Grains said.