EU cereals projections

The EU Commission recently released its cereals production forecasts for 2017/18 and updated 2016/17 estimates. Last Autumn’s harvest was below average as disappointing wheat yields, particularly in France, resulted in an 5.5% decrease in cereals production.

A recovery is forecast in 2017/18 with maize expected to be the primary driver with a 10% increase in harvest. Improved yields are forecast to help soft wheat recover some of the losses suffered during last year’s harvest. That said, 2017/18 production is predicted to be 5.5% lower than 2015/16, as the EU crop area is decreasing.

Cereals use is forecast to rise by 1.2 Mt to reach 284.4 Mt in 2017/18 and stocks are projected to rise to 39.8 Mt during this time. Wheat usage is expected to decline slightly to 116.6 Mt next year, however barley usage is forecast to rise by 1.6 Mt (to 52.6 Mt) over the same period. Only minor increases are expected for maize meaning that stocks are forecast to rise to 13.7 Mt in 2017/18, 2.6 Mt higher than 2016/17.

EU cereals production forecasts to 2017/18 (Mt)

Given the poor 2016 harvest in Western Europe, a recovery in 2017/18 is unsurprising. The fact that the recovery in wheat production is only partial is also a logical reaction to abundant global supplies and the inevitable sluggish prices. This should assist UK wheat prices. UK barley producers may face increased continental competition in 2017/18 although EU barley stocks fell in 2016/17 so excess production should replenish stocks.