Concerns over drought in western Europe and North Africa shifted up a gear as Spain’s was seen as already damaged, with farms in major UK cereals areas warned of “significant risk”, and Morocco seen facing “significant” harvest losses.
“Fears are growing that Europe could face a major drought as water reserves are very low in western Europe,” including France, Portugal and Spain, besides Morocco, Agritel, the Paris-based consultancy said.
The comments came as US Department of Agriculture attaches in Madrid warned that Spanish winter grains were “at a very critical situation” after “the driest winter ever recorded”, which had seen some areas without rain since the first week of November.
Surface soil moisture in most of Spain’s growing regions is below 5mm, when less than 10mm “will not support seed germination or early growth potential”, according to the attaches.
They added: “Crops in Andalucia, Castile-La Manca and Aragon already show signs of lowered vegetation health,” noting that in Andalucia, a main durum-growing area in southern Spain, “dry conditions and low temperatures through February have resulted in a crop size below normal”.
‘Hit hard’
In the UK, the National Farmers Union urged the reinstatement for tax relief for farmers building reservoirs after environment watchdogs warned of risks to growers from a six-month period which in the major cropping area of East Anglia had been the “the driest since records began in 1921”.
In some other areas too, “river flows and groundwater levels are unlikely to recover and will pose significant risks to spring planting and subsequent summer abstraction”, the Environment Agency said.
“Those farmers relying on refill of winter storage reservoirs to the normal levels to irrigate crops later in the year, will be hit hard.”
In the City, Shore Capital analyst Clive Black warned that the prospect of reduced yields risked reviving UK inflation, as retailers are forced to compete abroad for supplies, and swallow extra transport costs.
“Already, the first two months of 2012 has seen official and trade data record food prices above the top of our anticipated range” of 1-3% , down from growth of more than 5% last year, Mr Black said.
Record Moroccan imports?
Meanwhile, in North Africa, concerns have grown for winter grains in Morocco, a major wheat importer, where the United Nations warned last week “plantings were affected by dry weather and good rains are needed soon to prevent a significant loss of yield potential”.
Australia & New Zealand Bank analyst Paul Deane said that “significant production losses are now looking likely” after one of the driest winters in 50 years.
Since November, “rainfall deficits have continued to accumulate”, Mr Deane said adding that historic trends showed that “if the next month stays dry then yields could easily be 50% lower for Moroccan wheat this year”.
“If wheat production falls 3m tones year on year this season, then Morocco’s import requirements would jump to 5m tonnes in 2012-13 and still leave Morocco with very low ending stocks at June 2013.”
Imports at that level would be a record, beating the 4.2m tonnes set in 2007-08, on US Department of Agriculture estimates, which foresees Morocco buying in 3.0m tonnes of the grain this season.
Better for Germany
The concerns for much of western Europe contrast with expectations of an improved harvest further east, in Germany, where crops are seen improving this year from a 2011 result marred by a dry spring and harvest rains.
The winter rapeseed harvest will rebound 26% to 4.8m tonnes, with overall wheat output seen 6.3% higher at 24.2m tonnes, the German Farm Co-operatives Association said last week.
German crops are seen as avoiding significant damage from last month’s cold snap, which Agritel estimates could have cost France 1.9m tonnes in wheat output.
