Southern Europe Drought

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Southern Europe Drought

Jul 16, 2017 | 11:25 1 One of worst droughts in decades devastates South Europe crops

Isla Binnie*and*Paul Day

An olive tree is seen silhouetted in an olive plantation in Amelia, central Italy June 13, 2017.Tony Gentile

ROME/MADRID (Reuters) - Italian durum wheat and dairy farmer Attilio Tocchi saw warning signs during the winter of the dramatic drought to come at his holding a mile away from the Tuscan coast.

"When it still hadn't rained at the beginning of spring we realized it was already irreparable," he said, adding that he had installed fans to try and cool his cows that were suffering in the heat.

Drought in southern Europe threatens to reduce cereal production in Italy and parts of Spain to its lowest level in at least 20 years, and hit other regional crops including olives and almonds.

Castile and Leon, the largest cereal growing region in Spain, has been particularly badly affected, with crop losses estimated at around 60 to 70 percent.

"This year was not bad, it was catastrophic. I can't remember a year like this since 1992 when I was a little child," said Joaquin Antonio Pino, a cereal farmer in Sinlabajos, Avila.

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Pino said many of his fields had not even been harvested, because crop revenues would not cover the wages of laborers who gathered them.

While the EU is collectively a major wheat exporter, Spain and Italy both rely on imports from countries including France, Britain and Ukraine.

Spanish soft wheat imports are expected to rise by more than 40 percent to 5.6 million tonnes in the 2017-2018 marketing year, according to Agroinfomarket.

The drought has helped support EU wheat futures, which have risen around 6 percent since the beginning of June, although the prospect of a larger harvest in France this year should ensure adequate overall supplies in the trading bloc.

Scorched Olives

Spain and Italy are also among the world's top producers of olive oil.

Production in both countries is expected to fall, but the decline is likely to be particularly steep in Italy, where drought is the latest headache for olive growers already plagued by insects and a bacterial*disease in recent years.

Agustin Rodriguez Sanchez, a cereal and cattle farmer, feeds a stud in San Garcia de Ingelmos, Spain, July 10, 2017.Juan Medina

A 60 percent drop*in Italian output is forecast by the International Olive Council.

"We expected good production this year, but it hasn't turned out like that," said Francesco Suatoni, who tends about 4,000 olive trees*on the fringe of the ancient town of Amelia, in Umbria, central Italy.

Holding up a branch with small, shriveled pods on it he added: "Each little ball could have been an olive, but it's scorched.

"This year we expect to produce 50 percent less than last year. Let's hope not, but it will be very difficult to have a good crop."

Slideshow*(16 Images)

Other crops have been damaged, and Italy's agricultural association Coldiretti has estimated the drought could cost the nation's farmers more than*1 billion euros.

"The drought is affecting, to a greater or lesser extent, all crops in Spain, even those that rely on greenhouses, because there's a limit on the amount of water available," said Jose Ugarrio, analyst at the Spanish young farmers' association.

The production of nuts such as almonds and pistachios has also fallen sharply.

"We expect a 23 pct drop in almond production this year from last year," Ugarrio said.

Some see rising temperatures as a long-term trend, which threatens the viability of farming in the region.

"In this situation ... you realize it's almost impossible to keep going. You think OK, this year I will try to manage, but if the harvest is like this next year you won't be able to cope any more," said farmer Tocchi, who is also the local head of farmers' group Confagricoltura.

Some scientists have said heat waves like this year's are becoming more frequent, and are linked to man-made climate change.

"This is the first year we have watered the plants. There was never any need before," said olive grower Suatoni. Reply With Quote
Jul 16, 2017 | 11:52 2 Drought stokes fears of smallest Australian wheat crop in a decade

12:28 UK, 7th*Jul 2017, by Mike Verdin

Conditions for Australian crops have deteriorated so much that there is growing talk that the wheat harvest may fall below 20m tonnes – a plunge of more than 40% from last year's record high.

National Australia Bank earlier this week issued a forecast for a 23.3m-tonnes Australian wheat harvest in 2017-18, undercutting estimates from the likes of the International Grains Council of a 24.8m-tonne crop, and the US Department of Agriculture's 25.0m-tonne figure.

NAB cautioned over the lack of rain for the crop, and said that "if it stays dry, we expect further downside risks to this outlook".

However, the extent of the dryness means that even the NAB forecast may be overstated, many commentators believe, with concerns over canola production too.

'Terrible start'

At the Australian office of grain merchant Nidera, origination manager Peter McMeekin said that while "many still have Australian wheat production up around long-term average levels of 24m-25m tonnes, the reality is the Australian wheat crop is suffering big time.

"Last year's record production," when wheat output topped 35m tonnes, "is now a distant memory, as the trade here in Australia come to terms with the possibility of a sub 20m-tonne wheat production year, for the first time since 2007".

In Western Australia, grower Aaron Edmonds told Agrimoney.com that "at the moment, any talk of a crop above 20m tonnes is head-in-the-sand stuff.

Western Australia, the country's top grain-growing state, "had a terrible start to the season", he adding that canola crops had suffered particularly badly.

"There was a large swing to canola [in sowings] and that has taken the dry start the hardest. Some of the worst canola crops I have ever seen."

'Going to be down significantly'

The Grain Industry Association of Western Australia on Friday, in a preliminary estimate for the total Western Australia harvest, of crops including oats and lupins as well as canola and wheat, pegged it "within a range of 10m-12m tonnes", compared with 18.16m tonnes last year.

"With the season looking so patchy and areas still waiting on good rains, the total grain production for Western Australia is going to be down significantly on the record harvest achieved in 2016," the association said.

While some south western areas of the state had received late-June rains which "turned the season around", offering the "potential of at least average grain yields", crops in other regions are suffering.

"The recent rainfall events did not reach the north and eastern Geraldton port zone and the north and eastern Kwinana port zone," the association said.

"These regions still have large areas of land where crop has not emerged.

"At this stage, around 30%of intended crop area in the Geraldton port zone will not be harvested and about 10% of intended crop area in the north and eastern Kwinana port zone will not be harvested."

'Understandably worried'

One silver lining for wheat growers is that the concerns are at least helping to support prices, which have also been lifted by the North American drought worries which sent futures soaring on US markets, before a late-week correction.

Tobin Gorey said that Australian prices were also likely to "fall somewhat, but nerves about local crop prospects will likely act a handbrake.

"Growers are understandably worried about crops given dry conditions in many Australian winter grain regions."

Aaron Edmonds noted a jump in prices of noodle wheat, a premium variety, sold largely to Asia, and which he termed a "kind of barometer for the Western Australia crop.

"Its price has skyrocketed from around Aus$260 a tonne up to Aus$340 a tonne earlier this week."

'Very attractive protein spreads'

Indeed, Nidera's Peter McMeekin flagged the potential for Australian growers to find some consolidation in a knock-on effect of the depressed quality of the crop in the US – where the hard red winter wheat harvest of relatively low protein levels, and high protein spring wheat crop is at the epicentre of drought worries.

"With less rain, lower production and a more stressful growing season for the plant, comes protein," he said.

"The protein profile of this year's Australian wheat crop will most likely be much higher than last year.

"Continued high protein production issues in the northern hemisphere will quite likely manifest itself in very attractive protein spreads here in Australia." Reply With Quote
Jul 16, 2017 | 12:15 3 Good thing there is a two year supply of wheat on hand otherwise they might have to pay us for ours. Reply With Quote
Jul 16, 2017 | 12:26 4 They're going to pay as much as they can for all this feed wheat. Hahahaha Reply With Quote
Jul 16, 2017 | 12:43 5 Thanks for posting. Wonder by harvest time how much bs the trade can spew to keep a lid on prices. My area is doing good so far but it's a small area in the grande scheme. Local buyers are low balling fall bids on hopes no one has travelled anywhere. Come harvest there will be more off the combine opportunities but they'll need to pay more. Reply With Quote