Repeated rain that has spoiled part of the French wheat crop is also threatening to cause quality problems in Germany and Poland, increasing the likelihood the European Union will have more feed wheat and less milling crop to sell this season. New-crop wheat futures in Paris sank to a new four-year low on Friday as traders priced in the prospect of a glut of cheaper animal-feed wheat from this summer's harvest.
After some very poor quality readings in central and eastern France, the market is watching closely as harvesting moves into northern French plains and across Germany and Poland. "The big question in France is the north of the Paris Basin, where there are mixed reports so far, and the far north where there hasn't been enough feedback to judge," said Sebastien Poncelet of crop consultancy Agritel.
"There is a lot of rain in central Europe. The issue is whether the north of Germany and Poland, where there were good hopes for quality, have been affected by the latest rain." In France, the EU's top wheat grower and exporter, 76 percent of the soft wheat crop had been cut by July 28, data from farm office FranceAgriMer showed. Heavy rain last weekend are expected to have slowed harvest progress in northern regions this week and rain forecast for this weekend could bring more delays and increase quality risks.
"France is heading towards a good level of production but clearly with a decline in quality compared with a normal year," Benoit Fayaud of analysts Strategie Grains said. "There will clearly be a lot of feed wheat. You have to go back to the beginning of the 2000s to find such a situation." The main headache has been low Hagberg falling numbers, a measure of the suitability of wheat for flour-making. Low falling numbers could cost France sales to top export client Algeria, ADM Germany said in a report on Thursday, echoing market sentiment about poor export prospects for France.
GOOD START IN UK A clearer picture of crop quality in the northern plains that supply the main French wheat port of Rouen may not emerge until next week at the earliest, traders and analysts said. "We have some quality issues, with problems on falling numbers and protein. But it's very variable from one place to the next so it's difficult to establish a trend," one cash broker in the northern France said.
In Germany, the EU's No 2 wheat producer, rain in the past week had caused concern about Hagberg and protein levels. "I think that about 45 to 50 percent of the German wheat harvest has now been gathered and there is increasing talk that we have a quality problem," one German analyst said. "The rain throughout July seems to have had a negative impact on both protein and Hagberg numbers."
The rain has mainly hit central and south Germany. Wheat in north Germany, the main production area for export, has not suffered so much from rain and is largely in good condition, traders said. Rain is forecast across Germany this weekend. "The picture is still unclear overall but I think it likely that nationally we will lose about 1 to 1.5 percent protein content because of the rain," the analyst said.
There were similar worries about rain damage in Poland. About 20 percent of Poland's wheat crop has been gathered and some cuttings showed sub-milling protein content below 10 percent, although results vary greatly by region, said Wojtek Sabaranski of analysts Sparks Polska. "In regions that have received lots of rain recently such as south and central Poland, there will be quality problems," Sabaranski said.
"Based on early reports, it is likely that the share of milling wheat in total wheat output will be smaller than last year," he said. Quality indications from the start of the wheat harvest in the UK, the EU's No 3 wheat grower, were more promising. "First indications are that specific weights are average, Hagberg falling numbers are good, whilst protein contents are low," crop consultants ADAS said in a crop update on Thursday.
Just under 5 percent of the crop had been harvested by Tuesday and yields were close to farm averages, it said. Traders expect a sharp rebound in British wheat production this year after improved growing weather. The International Grains Council on Thursday maintained its outlook for a UK wheat crop of 15.5 million tonnes, up 30 percent from last season.
