Drought threatens on-target EU cereal production

By Anthony Fletcher

- Last updated on GMT

Related tags Wheat European union Fao

This year's total EU cereal harvest remains in line with the last
five years, though droughts continue to put pressure on prices.

Indeed, once again, drought is keeping crop yields at low levels in southern Europe (Spain, Portugal, France, Italy and Greece).

But overall, detailed scientific analysis by the European Commission's advanced crop yield forecasting system suggests that cereal production, for the moment, remains stable.

The forecast published last Friday by the Commission provided yield estimates for the main crops throughout the European Union, comparing these with last year's production and the average harvests over the last five years. It also identified the areas most affected by drought this year and compared the situation with past extreme drought events.

The report follows a recent FAO study, which suggested that world cereal demand is likely to surpass supply in the coming 2006/07 marketing year, pushing down stocks to an uncomfortably low level, according to the FAO.

This will continue the steady upward trend in prices. Indeed, wheat prices are likely to remain generally high and volatile in the new season, the FAO said.

The EC report suggests that EU crop yield levels are suffering this year from similar conditions to 2005, though to a lesser extent. Dry conditions and hot temperatures have again had an impact on water resources in the affected areas.

If the drought continues, the affected area could get bigger and crop yield impact worsen. Any resulting impact on irrigation would affect grain maize in addition to sugar beet and potatoes.

Comparing with the 2001-2005 averages, for soft wheat, winter barley and maize the Commission forecasts a potential yield increase respectively of 4.3 per cent, 2.3 per cent and 3.0 per cent.

For durum wheat the forecast is for a potential yield decrease of -2.3 per cent. For spring barley a potential decrease of -4.4 per cent is forecast.

The geographic area affected by the current drought is less extended than that of the extreme droughts in 2005 and in 2003. For instance, the area affected by the drought impact on wheat production makes up 14 per cent of the total EU area in 2006, compared with 17 per cent in 2005 and 23 per cent in 2003.

However, some of the affected regions such as southern France, Catalonia in Spain, Sardinia, and central and north-western regions in Italy, show a worsening situation in terms of the water reserves accumulated since spring.

On a positive note, the rain deficit in the most affected areas in 2006 started mainly in spring, whereas in 2005 it started well before (as far back as autumn 2004). In the northernmost regions of the concerned areas the hot temperatures arrived later, making the impact on soil moisture less dramatic than in 2005.

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