Prolonged rising temperatures in EU threaten grain yield in top producing countries

Europe is seeing continued heatwaves, along with poor rainfall, which are likely to weigh on its crop productivity.

Parts of Greece, eastern Spain and southern Italy are seeing severely-high temperatures, the European Centre for Medium-Range Weather Forecasts said Aug. 2.

The EU Joint Research Centre’s Monitoring Agricultural Resources unit, or MARS, reduced its cereal yield estimates for marketing year 2023-24 (July-June) to 5.46 mt/hectare, from 5.52 mt/ha in June, because of drier-than-usual weather in several parts of the region.

MARS has lowered its soft wheat yield forecast to 5.8 mt/ha in July from 5.92 mt/ha in June. According to MARS, corn yields in the EU for the year are now expected at 7.53 mt/ha, against 7.61 mt/ha a month earlier.

EU

** Most of Europe is likely to see higher temperatures continue over the next two weeks, according to medium and long-range forecasts from MARS.

** However, Europe is likely to see a rise in rainfall during the next fortnight which may compensate for the impact of the heatwave, the agency said.

** Most of Europe, especially France and Germany, are expected to see normal rainfall during the next two weeks, according to the agency.

** A likely rise in rainfall may help crop yields in the ongoing harvests of corn and wheat, among other cereals.

** The European Commission forecast in its June update that EU cereal production in MY 2023-24 (July-June) would be 276 million mt, against 280.5 million mt seen in the previous estimate.

** Platts assessed EU wheat with 11% protein content CPT Rouen at $277/mt July 19, up $18.25/mt day on day, according to S&P Global Commodity Insights data.

Australia

** Most parts of Australia are likely to remain extremely dry over the next two weeks, the country’s Bureau of Meteorology said in a forecast Aug. 2. Poor rainfall is expected over most of Western Australia and New South Wales during the next two weeks.

** Western Australia and New South Wales are key wheat suppliers and poor showers there could impact crop yields.

** Temperatures are likely to be above-average across most of Western Australia during the next two weeks, according to the bureau.

** Most of the Western Australia and New South Wales are also likely to see above-normal temperatures, it added.

** Poor rainfall along with rising temperatures are likely to impact ongoing crop plantings, including wheat, in most parts of the country, trade participants said.

** The Australian Bureau of Agricultural and Resource Economics has forecast marketing year 2023-24 (October-September) wheat harvest at around 26.2 million mt, down 34% year on year, which is expected to weigh on exports.

** Platts assessed FOB Australian Premium White wheat $1/mt lower on the day at $299/mt Aug. 2, S&P Global data showed.

US

** Despite showers in July following a largely dry June, drought conditions still weigh on crop output.

** According to the US Drought Monitor, 59% of corn crops have been affected by moderate or worse drought, while 23% are experiencing severe or worse.

** In the Corn Belt, thunderstorms are occurring in some of the driest Midwestern areas, including Missouri, according to the US Department of Agriculture.

** Cool and dry weather covers the eastern Corn Belt, while a thick plume of Canadian wildfire smoke is spreading across portions of the Ohio Valley and Great Lakes States.

** Over the coming days, shower and thunderstorm activity will gradually shift from the northern Plains and southwestern Corn Belt toward the Tennessee Valley and southern Appalachians, including Kentucky.

** Later in the week, heavy rain is expected to occur briefly along and near the Atlantic Coast, “especially in already-waterlogged sections of the Northeast that experienced varying degrees of flooding during July,” the USDA said.

** Hot and dry weather will persist in the south-central US, extending into parts of the Mississippi Delta. Rest of the Far West is expected to be mostly dry.

** Platts assessed US Corn CIF New Orleans at $216.25/mt Aug. 2, according to S&P Global data.

Argentina

** Showers returned to the southeast, while mostly dry, seasonably mild weather continued elsewhere. Rainfall totaling 10 to 35 mm benefited emerging vegetative wheat across southeastern Buenos Aires.

** Mild, sunny weather favored emerging winter grains in other key production areas that recently received timely rainfall.

** According to the government of Argentina, corn was 79% harvested as of July 27 versus 89% last year. Meanwhile, wheat was 96% planted.

** Platts assessed Argentina corn FOB Up River at $206/mt Aug. 2, $3.45/mt lower than the previous assessment, S&P Global data showed.

Brazil

** Rainfall ranged from 2-5 mm in northern Paraná to more than 25 mm in southern Rio Grande do Sul. Mild weather (daytime highs ranging from the mid 20s C to lower 30s C) accompanied the rain, while nighttime lows dropped below 5 C locally and no freeze was recorded

** According to the government of Paraná, 11% of second-crop corn was harvested as of July 24, and another 70% had reached maturity.

** Elsewhere, seasonal showers lingered along the northeastern coast as warm, dry weather prevailed farther inland, favoring drydown and harvesting of corn.

** According to the government of Mato Grosso, corn was 92% harvested as of July 28, compared with 98% over the same time last year.

** Platts assessed Brazil corn FOB Santos at $219.77/mt Aug. 2, 69 cents/mt lower than the previous assessment., S&P Global data showed.

Malaysia and Indonesia

** World’s largest palm oil producers Indonesia and Malaysia may face an increased threat of forest fires in the coming month as the developing El Nino phenomenon is expected to exacerbate seasonal dryness this year.

** Indonesia’s Meteorology, Climatology and Geophysics Agency (BMKG) has forecast that it expects the country to hit the peak of the dry season between July and August.

** The two countries account for about 85% of the world’s palm oil trade and are currently looking at ways to mitigate forest fires which covered much of Southeast Asia in a haze in 2015 and 2019.

** Lower rainfall due to El Nino may impact palm oil production but with a delay of about 9-10 months, Malaysia’s Palm Oil Corporation, or MPOC, said Aug. 1.

** MPOC expects that an El Nino event may reduce Malaysia’s annual palm oil production of around 18 million mt by 1 million-3 million mt in 2024 and forecast palm oil prices to rise to MR 4,300/mt ($946.3) in the year

** Platts assessed crude palm oil FOB Indonesia at $917/mt Aug. 2, up 1.3% on the day, S&P Global data showed.

Tags: grain, EU, drought, crop forecast