Wet harvest causes quality issues in France…

By Peter McMeekin

As torrential rain continues to batter many parts of Europe this summer, winter and spring crop conditions in France, the European Union’s biggest grain exporter, are tumbling rapidly. The word catastrophic has been rolled out in the past week to describe this year’s harvest, with crop ratings at an eight-year low and farmers potentially facing the worst production outlook in at least ten years.

Last week’s crop update from FranceAgriMer rated the French soft wheat crop at just 50 per cent good-to-excellent. This is inferior to conditions at the same point in 2020, another harvest dogged by heavy rain, and the worst reading since 2016, when France reaped its smallest wheat crop since the 1980s. While the rating was unchanged from a week earlier, it is down from 78 per cent at the same time last year.

As of July 29, the durum wheat crop was rated 58 per cent good-to-excellent, compared to 67 per cent a year earlier. At the beginning of last week, the winter and spring barley crops were rated 53 and 66 per cent good-to-excellent, respectively, down from 80 and 73 per cent at the same time in 2023.

This spring was the nation’s fourth wettest on record, according to Meteo France, with rainfall registrations 45 per cent higher than the 10-year average. Sunshine recordings throughout the spring were also around 20 per cent lower than the seasonal average, delaying crop development and crucial field activities. Landslides and flooding caused severe damage in many farming areas, and a continuation of the unseasonably wet conditions into the summer months has caused regular and prolonged harvest delays.

As of July 29, FranceAgriMer was calling the soft wheat harvest 67 per cent completed, a big jump from only 41 per cent a week earlier but well behind the 86 per cent recorded on July 31, 2023, and the five-year average of 84 per cent. The durum wheat harvest was 8 per cent completed at the start of last week, against 67 per cent on July 22 and 100 per cent a year earlier. The winter and spring barley harvests were 99 and 54 per cent realised on July 29, respectively, compared to 94 and 31 per cent a week earlier and 100 and 94 per cent in the same week of 2023.

According to French farmer lobby group, the General Association of Wheat Producers in France (AGPB), field surveys suggest a drop in wheat output of at least 15 per cent compared to 2023 is on the cards, but it could be as much as 28 per cent with quality issues increasing. That would put this year’s harvest as low as 26 million metric tonne, the lowest in more than a decade.

Respected independent forecaster and analyst Stratégie Grains is calling the soft wheat crop a tad higher at 26.7mmt. While popular French website Moisson Live, which translates to Harvest Live and compiles harvest results from farmers across the country, is projecting a soft wheat crop of 26.4mmt based on regional data and samples submitted up to July 30. 

Grain quality is now the biggest concern, with reports of poor protein and extremely low test weights quite prolific since harvest commenced. After the 2016 harvest disaster, when yield forecasting systems failed to anticipate the most extreme yield loss in over half a century, France introduced new crop forecasting regimes and revised its wheat quality standards, including a minimum test weight of 76 kilograms per hectolitre for milling wheat.

According to local buyer Soufflet Agriculture, test weights in the 74-75kg/hl range have been quite common this year, which will not only decrease total output and the proportion of milling wheat but could present issues for delivery against MATIF wheat futures, which also have a minimum requirement of 76kg/hl. The average protein content of wheat that makes the weight is reportedly running in the 11-11.5 per cent range, against the milling wheat futures specification of 11 per cent minimum. There are rumours that Lithuanian and Latvian milling wheat is being bought in to deliver against futures shorts as the French farmer is a very reluctant seller at the current price levels.

Assuming 65 per cent of the soft wheat harvest makes milling grade, which may be generous considering the surfacing quality issues, that is just 16.9mmt of milling wheat in France this year, compared to the recent low mark of 16.1mmt from the 2016 harvest. With this year’s harvest now past the peak, the trade is coming to the conclusion that wheat exports will not be as robust in 2024/25 compared to recent years due to the emerging conundrum.

With a potential aggregated loss of income exceeding €1.6 billion (AUD2.7 billion), French farmers are calling on the government to provide financial aid to mitigate the financial pain. The grain growers are seeking compensation, tax relief and deferral of loan repayments. They are also calling for the release of the European Union’s crisis funding, known as the agricultural reserve.

On Monday of last week, French Agriculture Minister Marc Fesneau visited a farm in central France and announced “exceptional measures to support cash flow” that could be mobilised at the national and European level, as well as “action by banks and insurance companies”. Although the minister mentioned the possibility of commencing talks with Brussels to mobilise the EU’s agricultural reserve, formerly known as the crisis reserve, no decision has been made as yet. The mechanism was first triggered in 2023, following Russia’s invasion of Ukraine, to help Eastern European countries protect their farmers and economies against increased imports of cereals and oilseeds.

The French harvest is being heavily scrutinised by the global trade and the MATIF shorts, with milling wheat availability potentially at its lowest level this century. Exporters are scrambling, and 2024/25 shipped volumes are already lagging last season and the five-year average. Farmers in many areas are searching for domestic feed homes due to quality downgrades. French milling wheat may already be trading at a significant premium to Russian-origin wheat, but the managed-money short positions on MATIF appear excessive in a shrinking crop environment.

Call your local Grain Brokers Australia representative on 1300 946 544 to discuss your grain marketing needs.