The European Union Commission has released its short-term outlook, which states an increase in fall-sown cereal and oilseed acreage could help relief the tight supply situation. It state the 2012 cereal harvest was about 5% lower than the previous year at 272.3 MMT and wheat production was down 4.2% to 123.2 MMT due to lower yields. But it reports wheat acreage for the 2013 harvest is up 2.2% in the EU-27. Based on an average yield, it sees the potential for a cereal crop (usable production) of 291.1 MMT (up 6.9% from this year) and for 6.3% increase in wheat production.
The commission states the current outlook is based on the assumption of a considerable slowdown in global economic development for 2012 and 2013, both in the developed world and in large emerging economies, thus impacting some on the demand for EU exports. "On the other hand, EU exports have been positively affected by exchange rate developments in 2012. Economic growth in the EU is projected to be fragile, mainly in certain Member States, which generally translates into modest consumption development for dairy and a decline for meat products," it states.
It expects meat production to contract slightly in 2013 to 43.5 MMT before recovering the following year. "Pig and beef meat production are expected to decline in 2013, but recover in 2014, while poultry meat is expected to record for the first time in last years a decline in production. Feed costs would remain the main driver affecting the meat market, although their current high level could improve with a higher harvest," it states.
Link to full report.