EC ups by 8% Romanian wheat crop forecast, in line with last year’s crop.

By bne IntelliNews May 14, 2014

Romania’s wheat crop would reach 7.4mn tonnes this year, in line with last year’s performance – Ziarul Financiar daily reads, quoting the latest EC forecast. This will make available some 3.3mn tonnes for export – which is however well [some seven times] below the export potential of Ukraine and Russia, speaking of the Black Sea region alone.

The Commission thus improves previous forecast by 8% -- the second largest upward adjustment operated from the previous forecast. The move was explained by favourable weather. It was the rainiest April month in the last 39 years in Romania, the report explains.

Romania’s wheat crop last year was the highest since 2004, when the Romanian farmers have produced 7.8mn tonnes of wheat. Last five year’s average wheat crop in Romania was 6.2mn tonnes.

Agriculture has significantly contributed to last year’s 3.5% GDP growth and in principle this can create negative high base effects this year. Farmers’ crops are particularly volatile in Romania since the irrigation system is underdeveloped. But on longer term, the growth potential for the country’s agriculture is robust while its realisation depends on i. accumulation of small farms into medium-sized or large ones and ii. development of the irrigation system.

Initial estimates for Romania’s wheat crop were more pessimistic. French consultancy firm Strategie Grains was forecasting 6.6mn tonnes in February [10.8% down y/y] while the European association of grain traders Coceral indicated 6.9mn tonnes in April. EC itself was forecasting 6.7mn tonnes earlier in April, before the latest update.

Earlier this week, Romanian farmers announced expectations for major [75% y/y] surge in the rapeseed crop this year. Romanian farmers will cultivate rapeseed on 430,000ha in 2013-2014 season, which is 60% up y/y but only 0.6% of the total country’s cultivate land – according to Angelo Nicolae, head of local grain trader Brise Group, quoted by Bursa daily. Overall, the crop may rise by as much as 75% from last year – while further growth potential remains substantial considering that a large part of the biodiesel that car-fuel companies have to purchase comes from import.

Larger crops tend to be rather exported – compared to the smaller crops that are instead sold on the local market, Nicolae explained. The local market will thus paradoxically be faced with smaller domestic demand and possibly higher prices he furthered.

A yield higher by 10% compared to last year would result in 75% larger crop, Nicolae estimated. Last year’s crop surged by 330% y/y to 686,000 tonnes – after the crop was severely damaged one year earlier. Rapeseed exports also surged to 471,927 tonnes [EUR 19.56mn] in 2013 from 68,246 tonnes [EUR 54mn] in 2012.

 

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