Dry Europe Will Impact Many AG Commodities This Year

In sharp contrast to the severe winter conditions seen in many areas of the US and Canada, there have been record high temperatures in many parts of Europe the past few weeks. Some major European cities saw conditions more typical of late spring and early summer and several ski resorts had to shut down due to a lack of snow. This follows a very hot European summer during 2022 with average temperatures during June through August the highest on record.

Climatic water balance in Europe

As a result, many areas of Europe were drier than normal at the start of the current winter season. When looking at Climatic Water Balance (which takes into account both precipitation and evaporation), there were significant regions of France, Germany and Poland already in deficit. While pre-holiday rainfall was heavier than normal in some areas of southern Europe, western and northern Europe rainfall was well below normal and is likely to increase the climatic water deficit.

Rainfall in Europe

The European Union (the EU) is composed of 27 nations who have Common Agricultural Policy (the CAP). This is why they are viewed as one entity in global production terms. The EU has a large share of global production in several Ag commodities. It produces 63% of the world’s rye, 34% of the barley, and 30% of the oats.

Even though Europe is located at higher latitudes, the EU is the world’s third largest producer of sugar as they are far and away the world largest beet sugar producer.

The EU also accounts for 23% of global rapeseed production which is comparable with Canada. Recent dry conditions in the EU may have their largest impact on the wheat market where the EU has a 17% share of global production. Russia’s invasion of Ukraine will restrict their wheat exports, potentially leaving the EU as the world’s largest wheat exporter. With drier than normal conditions since last summer, EU wheat supplies available for exports could be negatively impacted both this season and next.

EU Ag Commodities

Originally Published January 6, 2023

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