Drought causes drop in EU cereals

In its latest short-term outlook report by the European Commission the EU total cereal production for 2018 is expected to be around 284.3 million tonnes, which represents a decrease of 5% compared to 2017/18 and 8% compared to the last 5-year average.

The drought conditions hit wheat production the hardest leading to a decrease of 9% compared to 2017. The wheat production forecast is set at 129 million tonnes for 2018. As a result, the cereal prices have peaked during August reaching levels higher than last year, with wheat prices increasing by € 50 per tonne and barley by € 60 per tonne over last year’s prices.

Effect on livestock sectors

The dairy sector was also affected due to the significant reduction in grassland growth and fodder production. The increase in EU milk collection is lower than expected, with a forecast of 166.6 million tonnes for 2018, leading to an increase of 0.6% compared to 2017.

As for the meat sector, beef production is growing more than anticipated due to a reduced suckler cow herd in most member states, and a shortage of fodder linked with the drought, bringing forward slaughtering. The net beef production for 2018 is forecasted at 8 million tonnes which is 1.6% higher than in 2017.

Poultry production is also growing, expected to reach 14.9 million tonnes in 2018 in comparison with 14.6 million tonnes in 2017. This rise is linked with the recovery from last year’s bird flu, but also a drop in imports from Brazil, which is keeping EU prices high. As for pigmeat, ample supply is keeping prices down.