EU & UK: Barley crop forecast reduced as analysts worry about now wet weather hindering harvest progress
After 8 weeks of heat and drought conditions, Europe’s weather has turned wet as harvest advances or will soon across many northern regions, RMI Analytics said in their latest report.
The analysts’ barley crop forecast for the EU + UK is lowered to 54.9 mln tonnes from 55.08 mln in the early July forecast. The decline results from a further decline in Spain’s crop, along with a drop in Denmark, Sweden, and the UK yields, following RMI Analytics’ recent visits in those countries. While the winter barley crop is delivering as expected, spring barley has disappointed from a yield perspective.
On top of a declining barley crop scenario, global wheat production has dropped as well, as much as 5-10 mln tonnes by some estimates. Geopolitically, the external influences from other markets (e.g. wheat and corn) add further to the shifting supply situation, as Russia has exited the Black Sea Grain Initiative at a time when the country has produced another large wheat crop. Ukraine will be forced to rely upon non-vessel export channels for the time being, adding further to the export market dynamic globally.
Europe’s barley crop forecast is reduced and that reality is setting into the market, while harvest continues to advance amidst ongoing rain events. It will be important to watch the ability for the crop to get into storage under reasonable conditions, as any quality deterioration at this stage is not needed.
Elevated volatility remains at the forefront of markets, as last week alone barley prices have moved up and down more than EUR10/tonne, primarily on the geopolitical events related to Ukraine. The smaller European two-row crop is keeping malting premiums at very high levels and until harvest is finalized, there is no expected change in premium levels.
Mildly concerning is the fact that rain is hindering harvest progress in the UK and northern Europe, and 7-10 days of sunshine would be welcomed by farmers in order to advance harvest in a positive manner, the analysts said.
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