Danube Region: Market Update

June 23, 2016

A warm spring has somewhat offset the impact of heavy rains and high winds experienced in the Danube region in early 2016. Yields for Bulgaria, Hungary, Romania and Serbia in 2016 are expected to be satisfactory or high, and of good quality, despite some challenging growing conditions.

Bulgaria

Improved weather conditions in May have boosted growth and contributed to a rapid development of all crops. Building on the 2015 season, across Bulgaria planting areas have increased for all key crops: wheat (7%), barley (5.4%), rapeseed (4%), sunflower seeds (2.2%) and corn (1.8%). For 2016, these figures mean that wheat and barley crops, extend to almost 1.3 million hectares. They are well developed and the harvest is expected to be of good quality. This year's rapeseed, sunflower seed and corn crops have been planted over an area extending to a further 1.3 million hectares.

After the good start to the growing season, rain in May will delay harvesting.

Hungary

Following a challenging 2015 season, favorable weather conditions have resulted in a promising start to 2016. Warm weather has allowed wheat crops to grow well, though a reduced planted area will mean the total harvest will be lower than last year, 4.8 MMT in 2016 against 5.2 MMT in 2015.

2015 was a year of challenges, from good weather and working conditions in April, to water shortages in May and June. Average temperatures reached a 30-year high - some 1.7 degrees Celsius higher than usual.

For 2016, the outlook is positive, commodities sown during the autumn are showing promise. Quality and quantity expectations are good for this year's crops. In addition, spring sown corn, sunflower and soybean are promising a very good harvest - as long as weather conditions remain positive into the summer months.

At this stage in the season, we are pleased to report no issues with fungus infections or plant disease, but we will remain vigilant until crops are harvested next month.

Overall in 2016, the planted areas for corn, wheat and sunflower seeds are down slightly on last year, harvests are expected to show a commensurate reduction in volume, and exports too will be reduced. Prices remain competitive, meaning the commodities market is not as busy as in previous years.

Romania

Focusing on commodities including wheat, barley, corn, sunflower seeds and rapeseed, Romania has cultivated smaller planted areas compared to 2015. However, current forecasts suggest that the reduction in planting may well be offset by a higher yield per hectare.

Heavy rains during spring have boosted yields for wheat and barley. These conditions have also provided a good start to the season for corn and sunflower seeds. Equally, heavy rain experienced in late May might cause the presence of grass or other seeds in wheat and barley, though the application of treatments to these crops will minimize this risk. It is also important to understand how weather conditions this year may influence the main parameters of wheat: protein, gluten etc.

Export expectations for 2016 are good. In the last 12 months Romania exported more than 12.6 MMT of crops, including 1.5 MMT of barley, 0.8 MMT of rapeseed, 4.2 MMT of corn, 0.8 MMT of sunflower seeds and 4.4 MMT of wheat.

Barley harvesting has already started and the rapeseed harvest will follow shortly after.

Serbia

Planted areas, crop forecasts and export expectations are all positive for the 2016 season in Serbia. The area planted for all key crops (wheat, soybean, barley, rapeseed, sunflower seeds) has increased; only corn has seen a slight reduction from 1.2 million hectares in 2015 to 1.05 million hectares in 2016. Similarly, yields for these crops are forecast to increase, with the exception of corn, which is expected to show a small decline.

Corn exports are expected to almost double, from 1.2 MMT in 2015, to 2.2 MMT in 2016 - despite the anticipated reduction in planted area and yield. Wheat and soybean are also expected to see increased export figures, up some 50% and 60% respectively.

This year's barley, wheat and rapeseed crops are in very good condition. The application of protection products has kept the fields disease free, meaning production and yield are expected to be satisfactory. Long-term weather forecasts predict a dry, warm summer raising the risk of mycotoxins in harvested crops. A program of sampling and testing should identify contamination at an early stage.

Responsive and sensitive to neighboring markets, Serbia's 2016 season looks to match or exceed 2015.

Similarities between weather and climatic conditions across the Danube region mean these four countries will all be subject to the same influences on harvest results and export potential.

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