In its latest issue, discussing the state of EU agricultural markets for 2017/2018, the report highlights that for the second year in succession, the harvests of cereals such as maize, cereal and barley would be slightly below average in 2018.
Compiled with the Russian import ban in mind, the report believed global cereal supplies would be ample, with prices not expected to rise significantly.
Russia, which imposed an embargo on a range of EU)agricultural products since 2014 following EU sanctions, is expected to continue these restrictions until the end of 2018.
“In such conditions (decreasing area, yields under historical trends), the EU’s total cereal production is expected to be below 300 million tonnes (t) for the second consecutive year,” said the Directorate General for Agriculture and Rural Development of the European Commission.
“In terms of yield, the spring weather conditions in the EU have hampered crop development.”
The report identified difficult growing conditions in Spain, where a significant drought and persistently hot and dry weather have affected crop development.
Projected winter barley yield in Spain is 21% below the trend, while spring barley is 33% below.
North-western France and Belgium were other areas of concern, where the combination of a dry May and a hot June resulted in unfavourable conditions for most winter and spring crops.
Wider areas, including the Netherlands, Germany, northern Italy and central Europe, were also hit by a severe heatwave in June that affected crop production.
In total, figures for 2016/17, for total EU cereal production was 294.6 million t, around 2% below the last five-year average.
In contrast, the report noted a significant increase of beet planted area in 2017 without quota.
“EU farmers have just planted the first crop for 5 decades that will not face any type of market restrictions,” the report explained.
“First observations show that the EU area sown with sugar beet for the 2017/2018 marketing year has grown significantly by comparison with 2016/2017.”
The increase was 16% over the previous year and 5% over 2013/2014.
Predominantly countries in the competitive ‘sugar belt’ region have significantly increased the area sown with sugar beet in order to capture new market opportunities.
These countries include Belgium, France, Germany, the Netherlands and Poland.
Other countries’ production area is closer to the 5-year average. “This confirms that sugar beet production is increasingly concentrated in the competitive regions,” the report added.
Milk production in the region also remained modest compared to this time last year.
The EU forecast a number of factors affecting EU milk price trends including a change in world supply.
“After a milk season with unfavourable weather and very low prices leading to a reduced milk collection in New Zealand for the second consecutive season,” said the report.
“The strong rise in milk prices could favour a significant recovery in milk collection there at the September-January seasonal peak.”
The size of the increase would also depend largely on weather and pasture conditions.
The report identified a butter shortage, a strong cheese market and high skimmed milk powder (SMP) exports as the three main current features of the dairy market.
Other forecasts include the meat market, where healthy beef exports aided in balancing supply and demand on the domestic market.
However, the dip in EU pigmeat production had pushed up prices and lowered exports.
Poultry production and trade have resisted several episodes of bird flu (avian influenza) by diverting trade.
“EU sheep and goat production continues to rise, while meat exports were performing above expectations,” said the report.
In the first quarter of 2017, net beef production in the EU nearly stabilised (+0.2%).
By contrast, it grew by 2.1% in the first quarter of the previous year, resulting in a net increase of 1.4% in EU beef production.