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Highlights

Bulgarian farmers decreased winter grains’ planted areas in MY2017/18 by about 3% for wheat and by 21% for barley. Growing conditions to date have been generally favorable, albeit not as good as in the previous season, with very cold and snowy winter, cold and wet spring and varied adequacy of soil moisture reserves by regions. Provided that the weather cooperates later in the season, the country can expect a good crop and above average yields but lower than those achieved in MY2016/17. While wheat and barley had excellent yields in MY2016/17, corn was affected by drought. Early data indicates that corn area in MY2017/18 will likely stagnate. MY2016/17 wheat exports have been at a record high due to abundant supply, much better quality, and dynamic export demand. As of the end of April 2017, the country has exported 3.9 MMT of wheat, 1.5 MMT more than a year ago, 374,000 MT of barley, and 867,000 MT of corn. Active wheat exports depleted previously accumulated stocks.

General Information:

Overview

In MY2016/17 grain exports have been much higher than anticipated due to strong export demand and excellent quantity and quality of the wheat crop. Wheat prices have appreciated and have grown consistently since October 2016. Higher wheat exports led to stagnated domestic use compensated by increased consumption of barley and corn, mainly for industrial use and for feed. Overall grain use has been stimulated due to improving feed demand as a result of better livestock inventory and good “industrial” use for ethyl alcohol/ethanol production. Ending stocks declined.

MY2017/18

The weather in the fall of 2016 was moderately favorable for fall planting. Farmers were able to plant on time as some planting was done later due to drier conditions. Drought prevailed in Southern Bulgaria. Despite limited rainfall, newly planted wheat and barley remained in good shape. Deep snow cover in the period January – February managed to protect the crops from record low temperatures that reached - 25C. At the same time, the snowfall provided much needed moisture to build soil moisture reserves. The sub-surface soil moisture in March-April was below the levels of the last year with a higher deficit in Southern Bulgaria, however, rains at the end of April and early May helped to rebuild the moisture reserves. Provided that the weather cooperates for the remainder of the season, the country can expect slightly above average yields. Farmers planted 3% lower wheat area compared to MY2016/17, mainly due to depressed prices and higher beginning stocks. Production estimates are currently in the range of 4.9 MMT to 5.5 MMT. Current FAS/Sofia estimate for My2017/18 is at 5.1 MMT with an average yield of 4.7 MT/HA and a potential for yields to increase to 4.9 MT/HA (5.3 MMT).

Barley planted area decreased sharply by 21%. FAS/Sofia current estimate is for 140,000 HA (winter and spring barley). Production estimates are in the range of 600,000 MT-630,000 MT. FAS /Sofia expectations are for 600,000 MT with average yields of 4.3 MT/HA.

Projections about corn planting in MY2017/18 are for stagnation in the planted area compared to MY2016/17. This is caused by the fact that farmers suffered seriously from summer drought in the two previous years, had lower yields, and small or negative margins. Local authorities allowed another season of a limited derogation in use of neonicotinoids. However, farmers are likely to favor growth in sunflower area at the expense of corn. Area estimates vary from 410,000 HA to 460,000 HA, and current FAS/Sofia estimate is for 440,000 HA. Production expectations are in the range of 2.48 MMT to 2.7 MMT, and FAS/Sofia estimate is for 2.55 MMT.

MY2016/17

If FAS/Sofia estimates for MY2016/17 are used and compared to the previous marketing year, it shows 3.8% decline in harvested areas for the three major grains but 2.2% higher production, due to a record high wheat crop and lower corn crop affected by the summer drought. Wheat yields were much higher than expected initially at 5.03 MT/HA compared to about 4.53 MT/HA for the last two seasons. Barley yields were also higher at 4.36 MT/HA compared to 3.97 MT/HA in the previous season. The continued shift in use of more imported genetics is one of the reasons for this trend in average yields. Corn yields stagnated at 5.4 MT/HA due to repeated adverse hot and dry summer in the last two seasons

Grain Sector Trends MY2016/17

Wheat

Currently there are several key market trends in the market:

• Higher exports to date and depletion of stocks;

• Slight increase in feed use due to good availability but lower than expected due to booming exports;

• Continued trend of decreased use for human consumption;

• Increased use for ethyl alcohol production.

Wheat Supply and Demand Balance MY2014/15 – MY2016/17

Bulgaria

2014/15

2015/16

2016/17*

Marketing Year Begin

July 2014

July 2015

July 2016

Area, (000) HA

1,268

1,106

1,123

Production, (000) MT

5,347

5,011

5,65

MY Imports, (000) MT

47

56

40

MY Exports, (000) MT

3,037

3,518

4

Total Consumption, (000) MT

1,88

1,85

1,86


Wheat for Food Use: A gradual decrease in wheat consumption for food has been ongoing over the last 10 years driven by changing eating habits, demography and lifestyle. The first official data for 2016 indicates that this trend has continued with a 1.4% decline in annual consumption of bread, bakery products and flour by households (88.0 kg per capita of bread and bakery products and 8.9 kg/capita of wheat flour). Official data about wheat flour production also show a modest decline. Wheat flour output declined from 508,000 MT in 2014 to 503,000 MT in 2015 and reportedly stagnated in 2016. Currently FAS/Sofia estimate wheat used for food purposes at 940,000 MT.

The country continues to switch to higher-end flours and bakery products. Imports of ready to use mixes and dough for bakery products (HS#190120) in 2016 continued to grow by 19.5% in volume and by 51.9% in value (U.S. $7.3 million) compared to 2015.

Wheat for Feed: Domestic feed wheat consumption was slightly higher due to much better availability. However, fast growing exports and good wheat quality led to appreciating prices and feed mills had to switch to less expensive alternatives such as barley and corn.

The local dairy/livestock/poultry industries see stable or increasing animal inventories and some feed mills successfully exported ready feed to Romania and/or other neighboring countries. It is expected that feed exports will likely grow in MY2017/18 with expanding capacities of several feed mills.

Bulgaria is in the process of being approved by China to export feed to this market and the first such exports are likely to begin in MY2017/18. FAS/Sofia estimate that wheat feed use in the current season is about 3% more than in MY2015/16.

Wheat for Industrial Use – There has been a higher usage of wheat (and corn) for ethyl alcohol for spirits and medicinal purposes and ethanol due to better wheat availability. Grains estimated to meet this demand are used in a proportion of 30% wheat and 70% corn. FAS/Sofia estimate for wheat use for industrial purposes is currently at 60,000 MT for MY2016/17 compared to 50,000 MT in MY2015/16. The country remains a net exporter of ethyl alcohol. In 2016 exports grew by 6.8% while imports declined by 9%.

WTA data for the July-December period MY2016/17 (In Wheat Converted in CWT) is for exports of 3.3 MMT of wheat while official MinAg and industry estimates indicate about 3.9 MMT exported by the end of April. Major export markets remain in the EU – Spain, Italy, and Romania. The major non-EU markets in the current season are Vietnam, South Korea and Morocco. Current industry and FAS/Sofia estimates for MY2016/17 exports are close to 4 MMT. This will be the highest wheat exports for many years.

Stocks – Active exports to date, along with more lively local demand have resulted in depletion of previously accumulated stocks. Market estimates for MY2016/17 ending stocks are in the range of 170-250,000 MT depending on the final consumption and trade data. MinAg tentative data as of the end of April 2017 shows beginning stocks for MY2016/17 of 420,000 MT, local consumption at 1.8 MMT and exports at 3.9 MMT. MinAg reports 600,000 MT in available stocks (Bulletin April 28) and forecasts ending stocks at 370,000 MT at the end of June. Thanks to favorable weather and improved genetics, barley yields and production was very good. Still, the MinAg lowered its previous estimate to 694,000 MT as of early May 2017. Current FAS/Sofia estimate is for 720,000 MT total winter (710,000 MT) and spring barley (10,000 MT), slightly less than the previous estimate of 740,000 MT.

Barley

Barley Supply and Demand Balance MY2014/15 – MY2016/17

Bulgaria

2014/15

2015/16

2016/17*

Marketing Year Begin

July, 2014

July, 2015

July, 2016

Area, (000) HA

215

176

165

Production, (000) MT

852

699

720

MY Imports, (000) MT

2

15

16

MY Exports, (000) MT

550

546

390

Total Consumption, (000) MT

295

240

300

Barley for Food/Industrial Use: Barley is mainly used for malt for beer production. Over the years malt production has varied and was complemented by imports. Bulgaria is a net importer of malt. Local beer production has been stable with small fluctuations in demand for raw materials. In 2015 official data indicates malt production at 38,000 MT and barley used for this purpose at 55,000 MT (based on industry conversion indexes). Industry estimates for 2016 are for higher malt production and use of barley at 65,000 MT. Imports of malt (HS#1107) in 2016 declined by 15% to 13,665 MT due to improved local supply. FAS/Sofia estimate for barley used for food purposes (malt and other minor products) is at 70,000 MT.

Years201120122013201420152016
Beer production,000 liters494,8521,9510,5487,2485,035NA
Malt production,54,450,138,641,137,9NA
Malt Imports (HS#1107)MT12,26515,96619,50313,4516,14613,665

Barley for Feed: The good crop, lower export demand, better feed demand and competitive prices have encouraged higher feed use. FAS/Sofia estimate is at about 200,000 MT. The MinAg reported feed use at 174,000 MT at the end of April.

WTA data for the July-December period MY2016/17 is for exports of 237,000 MT while official MinAg and industry estimates are at 374,000 MT exported by the end of April. Major export markets are Libya, Spain and Romania. Exports lag significantly behind the previous marketing year due to lack of good export demand and regional competition. Current FAS/Sofia estimate for MY2016/17 exports are at 390,000 MT compared to 546,000 MT exported in MY2015/16.

Stocks: Higher stocks are likely to be accumulated in MY2016/17. The MinAg tentative data as of April 2017 estimates local consumption at 272,000 MT with about 68,000 MT available in stocks (Bulletin April 28) either to be exported (in addition to already exported 374,000 MT) and/or for ending stocks.

Corn

Currently there are several key market trends on the market:

• Much lower yields in MY2016/17 as a result of summer drought;

• Market prices were flat and declining since February, which along with lower yields, led to small/negative production margins and may result in stagnation in plantings in MY2017/18. On the other hand, domestic prices were firmer than those in the region which stimulated imports in the spring of 2017;

• Sluggish export demand lagging behind last year and tough regional competition;

• Increased domestic consumption due to higher use for food (starch) and for industrial use (ethyl alcohol);

Corn planting was discouraged by negative margins in the previous season and planted areas decreased by 15%. Since some areas were seriously hit by another summer drought, the harvested area reduced further and some market estimates are as low as 407,000 HA. Adverse summer weather led to stagnated average yields at 5.4 MT/HA, the same as in the previous season. FAS/Sofia’s revised estimate is slightly lowered to 2.22 MMT, as compared to 2.28 MMT for an earlier.

Corn Supply and Demand Balance MY2014/15 – MY2016/17

Bulgaria

2014/15

2015/16

2016/17*

Marketing Year Begin

October, 2014

October, 2015

October, 2016

Area, (000) HA

408

499

422

Production, (000) MT

3,137

2,697

2,220

MY Imports, (000) MT

57

40

100

MY Exports, (000) MT

2,062

1,325

1,300

Total Consumption, (000)

MT

1,093

1,151

Corn for Food: Corn for food is used mainly by the starch manufacturing industry and a small percent is used by food/confectionary industries for corn flour and other minor products. The starch industry currently uses the largest share of the crop. FAS/Sofia estimate for corn for food use is currently at 400,000 MT.

Corn for Industrial Use: Corn is used for bioethanol and ethyl alcohol production and is preferred over wheat. Production has steadily increased over the past five years. In the current season, industrial use is reported by market sources to grow further. FAS/Sofia estimate for corn for industrial use is at 140,000 MT with private estimates going as high as 190,000 MT. This industry was a primary buyer of imported corn in the spring of 2017.

Trade is Dried Distillers Grains with Solubles indicates that the country continues to be a net exporter of this product with growing local production and consumption. Exports of DDGS in 2016 increased by 35% compared to 2015. Turkey and Greece are the major export markets. Improved feed demand also stimulated imports. Romania and Austria were the main origins for imports.

Trade in DDGS 2011-2016, in Metric Tons
201120122013201420152016
Imports02612,6648844,22928,206
Exports20,86440,7644,50146,19753,38372,212

Corn for Feed: Corn has been a preferred feed by the poultry and pork industries. Due to dynamic wheat exports, feed mills switched to use more corn. Corn use for feed in the current season is estimated to grow by 4%-5%. The estimates about feed use vary widely from 400,000 MT to 680,000 MT (MinAg). Current FAS/Sofia estimate is for 600-650,000 MT.

WTA data for October-December 2016 is for exports of about 571,000 MT. Corn was exported mainly to the EU (Romania, Spain and France). The MinAg reports 870,000 MT exported by the end of April 2017 (based on crop year starting from September 1). The EU was the main export market with an 80% share (700,000 MT). Exports lag behind the previous season due to lower availability and regional competition. Current estimates for MY2016/17 exports are at 1.2-1.3 MMT. FAS/Sofia estimate is for 1.3 MMT. Imports were reported by the MinAg at 91,000 MT as of the end of April. The main origin is reportedly Serbia and the buyers are from the starch and ethanol industries. Romania dominated as a supplier for imports. Romania, Greece and Spain were the major export markets for Bulgarian corn.

Stocks: Currently, MY2016/17 ending stocks are projected around 200,000 MT, lower than in the previous season. The MinAg tentative data as of April 2017 shows beginning stocks for MY2016/17 of 400,000 MT and 1.1 MMT available in stocks (Bulletin April 28) either to be exported (in addition to already exported 870,000 MT) and/or for ending stocks.

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