West EU wheat harvest starts, weather hits yields

According to traders and analysts, Western Europe’s wheat harvest has started with first results confirming a drop in yields due to adverse weather but it is still too early to tell if the crop volume will fall as much as feared,  reported “Kazakh-Zerno” NA with reference to the “ForexYard“.

Europe has been hit by heat waves this month, as have Russia and the Black Sea regions, raising concerns about potential crop damage, sending wheat prices higher on both sides of the Atlantic with EU prices soaring 25 percent in three weeks.

The EU harvest is not yet in full swing and reliable results on size and quality will not be available for at least another week, traders said.

But first cuttings in western Europe showed that the damage could be less severe than initially expected, at least in some key producing countries, traders said.

In France, the bloc’s largest wheat grower, a third of the harvest had been carried out, although combines were only starting work in the key grain regions north of Paris.

First results showed very good yields and quality levels in the southwest of the country, where the harvest is nearly over, and good quality in central France, despite an overall 10 percent drop in yields compared with good 2009 levels.

“Concerns are still present, the crop is not in the barns yet, but the verdict out of harvesters seems a little better than initially feared,” one trader said.

These quality levels would be able to match export demand for milling wheat, traders said.

“The heat impact may have been overestimated but it’s just too early to say,” French analyst Strategie Grains said.

If so, the analyst said the French wheat crop forecast could be revised upwards to 35-36 million tonnes from a 34-34.5 million tonnes estimated by traders earlier this month.

In mid July, Strategie Grains cut its estimate for the EU crop by 3.6 million tonnes to 129.5 million tonnes, now stable on last year, to reflect the weather impact.

In the grain-growing regions in northern France, the most sensitive to heat waves, initial results were encouraging.

“The impressions are very disparate. We’ll need to wait until end July to have a clearer view,” a trader said.

Signs of quality Damage in Germany

In Germany, wheat harvesting has started in southern regions and should gather speed in the coming week, traders said.

Concerns remained that the recent heat wave had damaged both crop size and quality but the extent was unclear.

Germany’s farming association DBV said on Thursday it expected wheat yields to be between 10 and 20 percent lower than last year and said there were some signs of crop damage but did not give a wheat harvest forecast.

German farm cooperatives estimated on July 14 that Germany’s 2010 wheat harvest of all types would fall to 23.80 million tonnes from 25.19 million tonnes last year.

“The extent of damage seems to vary greatly between regions but there is belief that wheat on light, sandy soils will have suffered damage,” one analyst said. “I think we will have great regional variations in wheat crop quality.”

The first wheat harvested in Germany is not expected to be a national trend. Early yields were down by more than 15 percent on the year but market participants were awaiting results from the start of harvesting in major producing areas next week.

In Britain, where harvesting is expected to get underway in about a week but not reach full flow before mid-August, dealers estimate the 2010 wheat crop at 15 to 15.5 million tonnes, up from 14.4 million the previous year due to an increased area.

But the weather in the coming weeks will be key for quality.

“If combines got going today quality would be good, but we’ve got two and a half weeks yet and a lot can happen with the weather,” said a UK-based broker.

The wheat area in Britain for this year’s harvest is up 10 percent on 2009, the Home-Grown Cereals Authority said this month, issuing the results of a planting survey.

The wheat area has increased after a steep decline in the previous season due to adverse weather in the autumn of 2008.

Spanish farmers say they have almost finished field work in southern areas, which the farm ministry forecasts will produce 45 percent of the total crop, or 2.5 million tonnes of wheat.

However, harvesting has barely begun in the northern grainbelt region of Castilla-Leon.

Farmers and officials expect the crop to recover from a low 2009 crop but say it will be mediocre compared with recent years.

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