EU: Strategie Grains increases forecasts for EU soft wheat, barley stocks

Consultancy Strategie Grains sharply increased its forecast for European Union soft wheat stocks this season as reduced domestic demand for cereals during the coronavirus crisis outweighed an improved wheat export outlook, Reuters reported on April 16.

Lockdown measures to contain the fast-spreading novel coronavirus have boosted buying of some food staples, but the shuttering of restaurants and a collapse in fuel consumption have clouded the outlook for international grain markets, with corn prices Cv1 slipping to 3-1/2 year lows.

"The coronavirus health crisis that now grips a large part of the world has caused serious disruption to the global cereal markets," Strategie Grains said in a monthly report.

"Projected demand for cereals in the EU has been sharply reduced since last month across the milling, ethanol and malting sectors."

The French-based consultancy increased its projection of EU soft wheat stocks at the end of the 2019/20 season on June 30 to 13.7 million tonnes from 12.5 million estimated in March.

Weaker demand within the EU led Strategie Grains to cut milling industry demand by 1.3 million tonnes, it said.

Worsening prospects for crop-based biofuels, due to a collapse in fuel demand and oil prices, also led the firm to cut expected wheat use in ethanol.

In contrast, Strategie Grains raised its forecast EU soft wheat exports this season to 32.4 million tonnes from 31.2 million last month, citing continued brisk overseas demand and limited disruption to trade flows from the coronavirus crisis.

Farming agency FranceAgriMer similarly increased its projection of French soft wheat stocks on April 15 as declining demand in France and the rest of the EU outweighed expected record non-EU exports.

Strategie Grains also increased its estimate of EU barley stocks this season, notably due to an expected drop in demand for malt as lockdown measures hit beer consumption.

The drag on grain demand was expected to continue next season, with soft wheat stocks at the end of 2020/21 expected at a similar level to 2019/20 despite the prospect of a much smaller EU harvest, the consultancy said.

It reduced its forecast of EU soft wheat production in 2020/21 by 1.7 million tonnes to 135.0 million, down nearly 8% on the 2019/20 crop, as it made a further cut to the crop area after a poor sowing campaign in northwest Europe.

The coronavirus epidemic was not expected to affect cereal production in Europe, but could dent harvests elsewhere, Strategie Grains said.

It reduced its projection of world wheat production, including durum, by 9 million tonnes in 2020/21 to 740 million tonnes, citing potential impact from fertiliser supply problems in China and farm labour shortages in India.

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