EU sees good grain harvest, pointing to lower food prices

(BRUSSELS) - European grain harvests will improve this year, the EU predicted Thursday, in line with northern hemisphere trends that are pushing down world prices after months of food protests by the world's poorest.

The latest predictions provide "a positive sign" toward the possibility of food prices falling in future, though other elements are in play, a commission spokeswoman said.

Elsewhere is more good news for those suffering from the soaring food prices.

In the United States, the world's biggest wheat exporter, production is also expected to rise in the key month of August, according to analysts.

Meanwhile Australia, where harvests were badly hit by drought last year, has enjoyed propitious rainfall in recent weeks.

The total "cereals" harvest -- which includes potato, sunflower and sugar beet yields -- will be close to 301 million tonnes this year in the 27-nation European Union, up 16 percent on the 2007 harvest and nine percent higher than the past five years' average production, the EU's executive arm said.

Also helping the figures are rising food prices, a great incentive to farmers, and the EU decision not to require a percentage of farm land to be left fallow.

"The French wheat market follows the global wheat trends and therefore gives a good illustration," said Edouard de Saint-Denis, of French agricultural raw materials brokers Plantureux.

The standard French wheat price peaked at 248 euros per tonne in February. On Thursday the Paris-based Euronext exchange price for November delivery was 183.75 euros, representing a fall of 26 percent from the peaks that brought panic to the markets and misery to the consumers.

Internationally countries such as Pakistan and Tunisia have been taking advantage of the fall in prices to boost their purchases.

Europe's main crop yields will be above average this year thanks to good weather and an increase in the planted area farmed, the European Commission predicted.

The five-tonne-yield-forecast per hectare is significantly higher than recent years, thanks in part to an EU decision not to require a proportion of farmed land to be left fallow.

Within the eight crops considered, soft wheat, durum wheat, barley, grain maize, rape seed, sunflower, potato and sugar beet, the expected changes in yield varied widely.

Sugar beet production is expected to be up by 19 percent to 70.3 tonnes per hectare while the potato yield will actually drop by 1.1 percent to 26.5 tonnes per hectare, if the commission figures prove correct.

Sunflower crops are projected to have a yield of only 1.6 tonnes per hectare.

Crop yields also vary country by country with, for example, total wheat yield per hectare expected to hit 9.2 tonnes in Ireland but just 2.1 tonnes in Portugal, although the Portuguese figure would represent a far higher percentage increase on 2007.

The forecasts were based on updated analysis by the Commission's in-house scientific service.

Crop yield forecasts for 2008