The unprecedented drop in economic output in Q2 2020 (–11.4%) turned lower than expected.
The situation of the labour market may however worsen in 2021 due to the insufficient speed of economic recovery, as forecast by the European Central Bank.
For the Euro area, the unemployment rate might jump from 7.3% in Q1 2020 to 9.5% in 2021 before starting to decrease in 2022.
The increase in unemployment is impacting unevenly upon the different segments of the active population: young workers, the self-employed, and low-paid and part-time jobs are the most hit; civil servants and people who can work remotely are less affected
Overall, the impact of the crisis on food markets has remained limited thanks to the resilience of the food chain.
The emerging pattern seems to be that of a reinforcement of some pre-existing trends rather than a complete overhaul of the food system, with for instance an increase in e-commerce food sales as well as the demand for local food and short supply chains.
In this context, the situation in 2020 remains globally positive: dairy and meat prices recovered from some weakening during the acute phase of the Covid-19 crisis; milk collection growth remains strong; the positive trade balance in meat is increasing; the oilseed and protein production is estimated to increase;
EU olive oil exports will reach a new record level.
Notable exceptions are cereals (in particular wheat) and sugar, both having suffered from adverse weather and/or plant health conditions
A major uncertainty remains for the future trade relationships between the EU and the UK.
The first reported outbreaks of African Swine Fever (ASF) in wild boars on the Eastern border of Germany, and the subsequent closure of key (Asian) export markets to German exports of pig meat, give rise to strong concerns on the trade front, considering the share of Germany in those EU exports.
Arable crops
Total EU cereal production is estimated at 274.3 million t, 6.8% below last year,
with soft wheat production down to 115.5 million t & maize production at 63.1 million t, mostly due to adverse weather conditions that weighed on yields.
Trade over the 2020/21 marketing year is expected to decline, in particular due to wheat exports falling to 24 million t, a 35% decrease year-on-year.
Maize imports would increase, driving overall cereals imports up slightly (+2% year-on-year).
Total EU cereal consumption is due to slightly decrease in 2020/21 (-0.7% year-on-year).
EU oilseed production is estimated to increase slightly compared to the last campaign but to remain below the 5-year average.
Total oilseed meal consumption could slightly decline by 0.5% year-on-year.
Protein crops production is forecast to reach 4.5 million t, a 10% increase compared to last year. EU consumption, especially of feed, would rebound next year .
EU weather conditions affected cereals production
The persistently dry conditions over the summer across many parts of the EU influenced negatively the different stages of plant development.
Total EU 2020/21 cereals production is expected to reach 274.3 million t, -6.8% compared to 2019/20 (-2.6%/5-year average). High temperatures over the summer affected large parts of FR, RO, the Benelux countries, DE and BG.
The average daily temperature exceeded the seasonal values by 2 to 3 degrees.
The number of hot days (>30⁰C) was also significantly higher compared to the long-term average.
It was above 15 days in the Mediterranean region and Black Sea countries, and between 5-10 in FR, the Benelux countries and northern DE.
In August, significant rainfall in central EU, eastern PL and IE was beneficial for summer crops, while a lack of rainfall and high temperatures in southern ES impacted upon the water availability.
Soft wheat market to contract in 2020/21
The EU 2020/21 wheat production is estimated at 115.5 million t (-8% compared to the 5-year average).
Area hit a 13-year low and yield is -3.6% below 5-year average.
Nevertheless, first estimates for wheat quality are overall positive in DE and FR.
Biggest decrease in production is expected in FR (-7 million t compared to the 5-year average) and RO (-1.5 million t).
Yields declined in both countries, by 9% and 39% respectively due to abnormal dry conditions especially for winter wheat.
Smaller FR and RO crops should be partially compensated by larger-than-usual harvests in Mediterranean countries (ES, IT, SI) reflecting overall good conditions.
In PL, a near-record output volume is expected due to stable areas and above average yields. Global production is forecast at a new record, boosted by bumper harvests in Russia, Canada and Australia in particular.
EU exports could decrease to 24 million t (-11% year-on-year).
EU total consumption is due to decrease to 95.3 million t, mainly linked to smaller consumption in the feed industry (reaching 39.5 million t, -2.5% year-on-year)
Significant drop in EU maize production
The EU 2020/21 total maize production is estimated at 63.1 million t (-9.8% compared to last year’s record volume, -3.7% compared to the 5-year average).
With a stable harvesting area, the drop in production results from significantly lower yields across the EU (-7.7%/5-year average).
In 2020/21, production in FR should increase by 10.5% and reach 14.4 million t.
In RO, production is estimated at 10.2 million t (-41% year-on-year) due to a dramatic fall in yields due to extremely dry conditions in the eastern part of the country.
HU, IT and ES, on the contrary, are expected to achieve bigger harvests thanks to good growing conditions resulting in above-average yields.
According to the latest estimates, global maize production could break a new record. Global consumption should increase after a stabilization in 2019/20 and global trade remains dynamic, supported by demand for feed use and ample supplies from the US, Brazil and Ukraine. EU imports could reach 20 million t to compensate for the lower production.
Overall, total EU consumption may drop to 82.7 million t due to lower demand for feed use.
EU maize imports are however likely to increase in 2020/21.
Good market prospects for barley and other cereals
EU 2020/21 barley production should remain stable at 55.0 million t (+4.3%/5-year average) with major differences between winter (-12.5% year-on-year) and spring barley (+13.9% year-on-year).
EU barley consumption would benefit from a slight growth in industrial and in feed uses and increase year-on-year.
Malting barley consumption dropped significantly in 2019/20 and is assumed to rebound.
With ample availabilities worldwide, EU export prospects remain stable year-on-year and EU stocks-to-use levels should increase.
Total production of other cereals (including rye, sorghum, oats and triticale) would reach 33.4 million t (+8.8% year-on-year).
The production in PL, the largest EU producing country, should increase significantly (+29% year-on-year), especially for spring cereals.
Total consumption of other cereals in the EU is expected to increase due to the rise in production; feed use would consequently increase by 1.2 million t and reach 20.7 million t.
EU total oilseed production in 2020/21 is estimated at 28.4 million t (+0.9% year-on-year).
This is partly due to a 2.7% increase in rapeseed production.
Although still low in historical terms (14.8% below the 5-year average), the total EU rapeseed production benefits from a combination of higher areas and yields, reaching 15.8 million t. DE and PL production increased due to higher than average yields while FR production dropped due to dry conditions (-30%/5-year average).
With 2.8 million t (+3.4% year-on-year), EU soya production should be close to the record of 2018, benefiting from an increase in areas (+2.9% year-on-year) and in yields.
EU sunflower production should decrease to 9.8 million t (-2.5% year-on-year) despite a 1.6% year-on-year increase in areas, but yields are negatively impacted by dry conditions in major producing areas (RO, BG).
Crushing volumes are expected to decline by 2.5% year-on-year and reach 44.7 million t. Lower meal production could be compensated by a slight rebound of imports to sustain the demand.
Global soya production is forecast to reach a new record (370 million t according to the USDA), with a rebound of US production and a continuous increase in Brazil and Argentina.
Tied to the Chinese feeding industry demand, trade should expand globally.
Total EU oilseed imports of 52.5 million t (equivalent seeds and beans) would correspond to a 1.3% decline year-on-year, still 2.7% above the 5-year average
EU 2020/21 protein crops production is expected to reach 4.5 million t (+10.3% year-on-year).
EU production of field peas (2.2 million t) and broad beans (1.2 million t) should increase thanks to a rebound in areas, combined with average yields.
Areas for other dry pulses and protein crops (including lentils and chickpeas) are estimated to be 3.1% lower than last year.
It is mainly due to a second year of declines in areas in ES (-12% in 2019/20 and -14% in 2020/21).
After two years of consecutive decreases in protein crops consumption for feed, both an increase in feed rations due to a lower availability of cereals and an increase in food demand would support a rebound of total EU consumption by 5.1
