SOURCE: Reuters

DATE: August 22, 2018

SNIP: European farmers are counting the cost of a summer heatwave that has shrunk cereal harvests and shriveled pastures, leaving some farms struggling to survive and shutting the EU out of lucrative export markets.

The severe weather in Europe has coincided with adverse growing conditions in other major grain producing zones such as Russia and Australia, raising the risk that supplies in exporting countries will be eroded to their smallest in years.

The latest harvest estimates have underlined the impact of drought and heatwaves in northern Europe. Germany’s farmers’ association DBV on Wednesday forecast a 22 percent plunge in grain production this year in the European Union’s second-largest cereal grower.

Germany endured its highest summer temperatures in over a century as extreme weather gripped northern Europe from Britain to the Baltic states.

The combination of poor harvest yields and shriveled grassland has led to spiraling costs for animal feed, putting pressure on livestock farms.

A sharp drop in the EU’s wheat harvest will also limit exports from the bloc, adding to nervousness about global supply given weather issues elsewhere, including in top wheat exporter Russia.

The weather woes in northern Europe and speculation about possible Russian government restrictions on grain exports have contributed to renewed price volatility on international markets.