Early last month, Romanian wheat farmer Costin Telehuz was brimming with optimism, especially after last year’s punishing drought. Then came the rain.
Three weeks of relentless downpours have hurt the harvest quality much more than the size. Now, he thinks just half of his crop is good enough to make the chewy dough used in bakery products, compared with the majority in a normal year. Much of the rest will end up as animal feed, fetching a lower price.
It is a similar picture elsewhere in the EU, the world’s No. 2 exporter, with areas of France and Germany also getting double normal rainfall in the past month.
Photo: Reuters
While Strategie Grains sees output rebounding about 12 percent this year after good spring showers, rain has taken its toll just as harvesting starts, risking fungal diseases and stalling tractors in soaked fields.
“We expect a very large rebound for EU crops,” Strategie Grains analyst Vincent Braak said. However, “a significant share” of the harvest would likely switch from milling to feed usage, he said.
Although than can threaten sales to key high-standard markets such as North Africa, there is much to cheer. The EU expects exports to rise 11 percent, and the bloc is a contender to steal market share from drought-hit North America and top shipper Russia, where export taxes have complicated trade. Plus, even lower-quality wheat might be in demand due to tight global feed-grain supplies.
Parts of Europe have in the past few days seen some of the most devastating floods in decades, and scientists warn that extreme weather events should increase as the planet warms.
Wetter-than-usual weather is expected throughout Germany from July 26 until early next month, a national forecaster said.
Milling-wheat prices extended a rally to a one-month high in Paris, while benchmark futures in Chicago headed for the biggest weekly surge in six years on concerns about adverse weather either side of the Atlantic.
In France, harvesting has been delayed, but wheat output should be above-average — as long as rain stops, Agritel commodities analyst Arthur Portier said.
Still, there is a threat to grain quality, which is crucial for trading with some major customers such as Algeria.
High freight costs could also hurt sales to far-away buyers, while keeping supply competitive in traditional markets nearer, crops office FranceAgriMer said.
Drier weather is expected next week, good news for farmers in the EU’s top grower.
Germany, the EU’s second-largest shipper also risks bacteria and fungal disease issues. Rain interrupted the collection of barley — which takes place before wheat — and more showers would prolong harvests, German farmers union DRV said.
“We have absolutely no concerns about the quantity,” said Johann Meierhoefer, agriculture division head at DBV, which sees winter-wheat output up 5 percent this year. “Speaking of qualities, the weather forecast is not as we would like to have it.”
Weather has definitely boosted volumes, with trader Cerealcom Dolj pegging output up 64 percent this year.
The country is among the first in the EU to start harvesting and has dominated tender sales in to top importer Egypt lately.
Yet heavy showers in Romania and Bulgaria have damaged quality.
Even so, the countries’ grain might appeal to nations in Southeast Asia, where there is healthy demand for feed wheat and concerns that Russia’s export tax could make purchases from there unreliable, Cerealcom risk manager Thomas Deevy said.
While Deevy said Romanian exports could accelerate, Telehuz described the mood as “a bit gloomy.”
“It’s not going to be a particularly bad harvest, but we really thought we’d be at the other end of the spectrum after what we endured last year,” said Telehuz, who farms in the Baragan Plain, a major grain region in the southeast.
Other commodities:
‧ Gold for August delivery fell US$14 to US$1,815 an ounce.
‧ Silver for September delivery fell US$0.59 to US$25.80 an ounce, while September copper was unchanged at US$4.32 a pound.
Additional reporting by AP and staff writer
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