Highlights

The total MY2016/17 EU-28 grain crop is revised down 3 MMT from the previous forecast to 296.7 MMT. The largest proportion of this reduction is due to diminished prospects for the corn crop in France, Germany and Romania albeit somewhat offset by an improved outlook in Hungary. Overall, it is the forecast 15.5 MMT year-on-year decline in wheat production which is of most significance for the total EU28 grain crop, which if confirmed is down nearly 16 MMT on MY2015/16 and over 31 MMT on MY2014/15. With wheat quality also in question, the focus is now turning to overall grain usage, especially for feed, within the EU-28 and the likely implications for trade.

Executive Summary

The total MY2016/17 EU-28 grain crop is revised down to 296.7 MMT. This is 3.2 MMT less than previously forecast, 15.8 MMT down year-on-year and 31.1 MMT down on the record crop of MY2014/15. Following previous reductions due to diminished prospects for the EU28 wheat crop, the latest decline is largely due to due to diminished prospects for the corn crop now forecast to reach 60 MMT, little changed on MY2015/16 but nearly 16 MMT down on MY2014/15. The latest reductions are mainly due to concerns in France, Germany and Romania, albeit somewhat offset by an improved outlook in Hungary. While the total EU28 area planted to corn was already forecast to be down in MY2016/17, challenging growing conditions during the key periods for crop development in the affected countries are now confirmed to have taken their toll. While the EU28 wheat crop is reduced marginally to 144.5 MMT, concerns regarding its condition, especially grain fill in France, mean that it could yet be revised lower. Both the production forecasts for rye and oats are reduced from the previous forecast, by 250,000 MT and 170,000 MT, respectively although both continue to show an increase year-on-year. Only production of barley, sorghum and mixed grain is forecast little changed, both year-on-year and on previous forecasts.

The EU28 is now estimated to have carried 29.5 MMT of grain stocks into the current marketing year, down 2 MMT on a year earlier but still substantial enough to partially offset the impact of the reduced harvest. While the latter would normally be of concern for domestic consumption, the reduced size and quality of the EU28 wheat crop, notably of French origin wheat given it is the EU28's largest wheat exporter, means third country grain exports are forecast to decline sharply in MY2016/17. Consequently, domestic feed grains are forecast to be in good supply such that third country imports, mainly of corn, are also forecast to decline year-on-year.

Crop specific

Forecast EU-28 wheat production is revised down marginally to 144.5 MMT, already down 15.5 MMT on MY2015/16, but concerns regarding its condition, especially in France, mean that it could yet be revised lower. While the most significant forecast year-on-year declines are in France (13 MMT), Germany (2.5 MMT), the UK (2 MMT) and Belgium-Luxembourg (650,000 MT), it should be noted that it is not the same story across the EU28. Indeed, wheat production in Italy is forecast to rise 1.45 MMT year-on-year, Spain by 1.55 MMT, Romania by 700,000 MT and Bulgaria by 650,000 MT. In the case of Italy, the increase is largely due to an increased planted area of durum wheat as well as improved yields both for durum wheat and soft wheat. For Bulgaria, favorable weather and a shift in genetics to imported French and Austrian varieties (instead of local varieties) is reported to have seen average yields improve significantly such that this is now expected to be the largest Bulgarian wheat crop for over twenty years. The quality of the Bulgarian wheat crop is also reported to be good. That cannot be said for all other EU28 countries. In particular, quality in France is of particular concern which, in addition to the reduced availability, will weigh on its ability to export, especially to third countries, in MY2016/17.

On the wheat demand side, with Food, Seed & Industrial (FSI) use forecast up marginally due to increased industrial use, mainly in the UK, the focus is on feed use and exports. Despite the much reduced crop, the reduced quality means that there are expected to be plentiful supplies of feed quality wheat within the EU28 meaning that although feed grain consumption is forecast down on MY2015/16, the decline is currently limited to 2.5 MMT. Indeed, the story is that of reduced third country exports, particularly from France which are expected to be more than halved as compared to MY2015/16, much of this lost trade being to Egypt. Total EU28 wheat exports are currently forecast to reach just 26 MMT. With the sharp forecast near 9 MMT year-on-year drop in exports in MY2016/17, wheat ending stocks are also forecast fall just 3.5 MMT despite the much reduced harvest.

With the Spring crops in France and Germany suffering from a lack of moisture and sunshine, non-irrigated corn is reported to have been particularly affected and an increased proportion of the overall crop is forecast to be harvested for fodder. With Romania's corn crop also revised down on the previous forecast, albeit up year-on-year, it is only Hungary's corn crop which is currently adding support to the EU28 number. Production there is proving to be larger than previously forecast and up 1.5 MMT year-on-year such that the total EU28 forecast corn crop is only reduced to 60 MMT. This is a larger crop than in MY2015/16 on a reduced area, down nearly 700,000 HA, but is nearly 16 MMT down on the record crop of MY2014/15. With industrial use of corn forecast unchanged, feed use of corn which was previously forecast to rise is now forecast down year-on-year. With much of this being sourced within the EU28, and given the availability of other feed grains within the EU28, third country corn imports are currently forecast to fall 2MMT year-on-year.

Wheat

2014/2015

2015/2016

2016/2017

Market Begin Year

Jul 2014

May 2015

Jul 2016

European Union

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

26747

26741

26786

26651

26932

27000

Beginning Stocks

9938

9938

12717

12722

15068

13983

Production

156922

156891

160012

160006

145270

144500

MY Imports

5975

5978

6916

6916

7000

7000

TY Imports

5975

5978

6916

6916

7000

7000

TY Imp. from U.S.

0

664

895

878

0

0

Total Supply

172835

172807

179645

179644

167338

165483

MY Exports

35418

35418

34677

34677

26000

26000

TY Exports

35418

35418

34677

34677

26000

26000

Feed and Residual

55000

55000

60000

61000

59000

58500

FSI Consumption

69700

69667

69900

69984

70300

70700

Total Consumption

124700

124667

129900

130984

129300

129200

Ending Stocks

12717

12722

15068

13983

12038

10283

Total Distribution

172835

172807

179645

179644

167338

165483

Corn

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

Oct 2015

Oct 2016

European Union

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

9568

9564

9467

9470

8891

8800

Beginning Stocks

6891

6891

9471

9748

7240

6748

Production

75840

75840

59083

58500

61149

60000

MY Imports

8646

8646

13200

13000

12000

11000

TY Imports

8646

8646

13200

13000

12000

11000

TY Imp. from U.S.

286

286

0

0

0

0

Total Supply

91377

91377

81754

81248

80389

77748

MY Exports

4026

4026

1800

2000

2000

2500

TY Exports

4026

4026

1800

2000

2000

2500

Feed and Residual

59500

59500

54700

54500

55200

51500

FSI Consumption

18380

18103

18014

18000

18000

18000

Total Consumption

77880

77603

72714

72500

73200

69500

Ending Stocks

9471

9748

7240

6748

5189

5748

Total Distribution

91377

91377

81754

81248

80389

77748

Barley

Market Begin Year

2014/2015

2015/2016

2016/2017

Jul 2014

May 2015

Jul 2016

European Union

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

12425

12401

12195

12161

12427

12350

Beginning Stocks

5621

5621

5924

6505

5246

6292

Production

60662

60611

61519

61479

60026

59750

MY Imports

88

88

292

292

300

300

TY Imports

269

269

200

200

300

300

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

66371

66320

67735

68276

65572

66342

MY Exports

9547

9578

10789

10789

6500

6500

TY Exports

10642

10642

10300

10300

6500

6500

Feed and Residual

35500

35000

36300

36000

38500

38000

FSI Consumption

15400

15237

15400

15195

15400

15100

Total Consumption

50900

50237

51700

51195

53900

53100

Ending Stocks

5924

6505

5246

6292

5172

6742

Total Distribution

66371

66320

67735

68276

65572

66342

Rye

2014/2015

2015/2016

2016/2017

Market Begin Year

Jul 2014

May 2015

Jul 2016

European Union

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2115

2110

1955

1950

2167

2120

Beginning Stocks

1204

1204

1395

1357

1016

1127

Production

8873

8838

7831

7800

8349

8100

MY Imports

102

102

51

50

75

100

TY Imports

96

96

50

50

75

100

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

10179

10144

9277

9207

9440

9327

MY Exports

184

184

161

160

150

150

TY Exports

167

167

160

160

150

150

Feed and Residual

4500

4500

4100

4000

4400

3950

FSI Consumption

4100

4103

4000

3920

4200

4100

Total Consumption

8600

8603

8100

7920

8600

8050

Ending Stocks

1395

1357

1016

1127

690

1127

Total Distribution

10179

10144

9277

9207

9440

9327

Oats

2014/2015

2015/2016

2016/2017

Market Begin Year

Jul 2014

May 2015

Jul 2016

European Union

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2511

2511

2478

2479

2482

2500

Beginning Stocks

894

894

782

780

596

591

Production

7833

7833

7498

7498

8019

7850

MY Imports

4

5

9

9

5

5

TY Imports

4

4

10

10

5

5

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

8731

8732

8289

8287

8620

8446

MY Exports

219

219

213

213

200

200

TY Exports

231

231

230

230

200

200

Feed and Residual

6050

6050

5780

5780

6100

6000

FSI Consumption

1680

1683

1700

1703

1700

1700

Total Consumption

7730

7733

7480

7483

7800

7700

Ending Stocks

782

780

596

591

620

546

Total Distribution

8731

8732

8289

8287

8620

8446

Sorghum

2014/2015

2015/2016

2016/2017

Market Begin Year

Jul 2014

May 2015

Jul 2016

European Union

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

147

149

140

142

129

131

Beginning Stocks

18

18

23

25

9

7

Production

883

894

731

740

735

750

MY Imports

134

134

117

118

150

130

TY Imports

131

131

120

120

150

150

TY Imp. from U.S.

2

2

0

0

0

0

Total Supply

1035

1046

871

883

894

887

MY Exports

17

17

2

2

5

2

TY Exports

1

1

2

2

5

2

Feed and Residual

975

980

840

850

850

850

FSI Consumption

20

24

20

24

20

24

Total Consumption

995

1004

860

874

870

874

Ending Stocks

23

25

9

7

19

11

Total Distribution

1035

1046

871

883

894

887