This article is taken from our IEG Policy platform dated 08/06/20.

The EU's wheat production is expected to reach one of the lowest volumes in the last decade, the European Commission has reported.

On 28 May, the Commission sharply reduced its forecast for the EU-27's soft wheat output in 2020/21 to 121.5 million tonnes, down from 125.8 million expected one month earlier.

This would be 7.1% lower than the bloc's estimated production in the previous season (2019/20) of 130.8 million tonnes.

One week earlier, the Commission's Joint Research Service (JRC) already lowered its yield forecasts for nearly all EU crops - including for winter wheat - after two months of unusually dry and warm weather across Europe.

The spring drought caused further difficulties for growing wheat after a soggy autumn and winter already disrupted sowings and prevented the crops from establishing strong roots.

While rainfall has recently brought some relief for the plants, more moisture will be needed to avoid that this summer's harvest shrinks even further compared to last year's bumper harvest.

The Commission also expects the production losses to impact the sales of the grain to third countries. It projected EU-27 exports of common wheat in the upcoming 2020/21 season at 26.5 million tonnes, down from 28 million one month ago.

This would be nearly a quarter less than the estimated export volume for 2019/20, which is currently set at 32.5 million tonnes.

Estimates by country

The Commission expects that France - the EU's top wheat producer - will see the largest drop in its gross production with 22.6%, to 32.3 million tonnes from 39.6 million last year

While recent heavy rainfall in the country broke a hot spell and provided some relief, the farming agency FranceAgriMer still considers the crops to be in their poorest state since 2011.

In Germany, gross production is set to drop slightly by 3.6% to 22.1 million tonnes from 22.9 million last year, while Romania's wheat output is forecast to go down 8.7% from 10 million to 9.2 million tonnes.

Meanwhile, Poland's crop is expected to stay largely stable from 2019 at around 11.1 million tonnes.

Other grains and oilseeds

The EU executive also slightly raised its forecasts for the bloc's output of maize (+2.7%, from 69.5 million to 71.4 million t) and barley (+0.2%, from 56.1 million to 56.2 million t).

For oilseeds, the Commission expects an even lower EU production of rapeseed in 2020/21 at 15.6 million tonnes - down from 16.45 million in its previous forecast and close to last year's disaster crop.

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This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.