Spanish Grain Harvest Seen 'At Least' 33 Pct Lower

With the harvest underway in the south of the country, analysts are forecasting this season's Spanish grain harvest to be "at least" a third lower than last season's bumper 23.2 MMT.

Spanish farmers' union Asaja say that this years grain harvest will only total 15.4 MMT, due to a combination of lower plantings and an acute lack of rainfall during March/April.

Other farm groups say that final production could come in as low as 13.5 MMT, a 42% decrease, as the harvest has not yet begun in the northern Castilla-Leon region that normally accounts for half the country's wheat production, where output is seen as much as 50% lower.

At the end of last year when farmers were making their planting decisions the costs involved in producing a 3.1mt/ha yielding wheat crop were around 600 euros, with 3.1mt of wheat at the time worth only 420 euros.

Many farmers therefore decide to either leave the land fallow or planted lower-maintenance crops like rape, sunflowers, field peas or vetches.

Spanish domestic cereal consumption is just under 30 MMT per annum. Even with a record carryover of an estimated 4.7 MMT of grain from the 2008/09 bumper crop, this leaves the country needing to import around 15 MMT in 2009/10 to cover it's needs.

With Spain the UK's top destination for wheat exports, this is potentially great news for us as they could easily take our entire reduced exportable surplus for 2009/10 in one fell swoop.