August 1, 2018 / 10:25 AM / a year ago

UPDATE 1-Drought to slash German grain crop by a fifth - farm lobby

* European soil moisture map (Adds detail, background)

By Michael Hogan

HAMBURG, Aug 1 (Reuters) - Germany’s 2018 grains harvest will slump about 20 percent on the year to around 36 million tonnes after crops suffered massive damage from drought and a heatwave, German farmers association DBV said on Wednesday.

Germany is the European Union’s No.2 grain producer after France, and in most years the EU’s largest producer of rapeseed, Europe’s main oilseed for edible oil. But German crops wilted under the highest May temperatures since 1881 and exceptionally dry weather in June and July.

EU benchmark wheat prices hit three-year highs in recent days because of worries about crop losses.

Germany will harvest about 18 million tonnes of winter wheat in 2018, down around 25 percent on 2017, the DBV said in a report.

Harvesting has reached an advanced stage earlier than usual because of the heatwave, even in the north German regions that have suffered most from dryness, the association said.

Harvest results are “showing the catastrophic impact of the dryness”, DBV president Joachim Rukwied said in the report.

The forecast is a further sign that a lack of rain and extreme heat have damaged crops in much of northern Europe. The heatwave is expected to cut Sweden’s wheat crop by 40 percent.

The latest estimate is based on actual harvest results rather than forecasts, and “confirms the pessimistic estimates of past days”, Rukwied said.

In early July, the association had forecast a grain harvest of about 41 million tonnes.

The association has called for around 1 billion euros ($1.2 billion) in special drought aid, but the government said it would wait for the agriculture ministry’s harvest report in late August before making a decision.

“Many farmers need help now,” Rukwied said, calling for an immediate decision on aid.

Germany’s 2018 winter rapeseed crop is likely to fall 24 percent to about 3.3 million tonnes, the DBV estimated.

The poor harvest means Germany, traditionally one of Europe’s largest wheat exporters, could need wheat imports in the coming year, traders said.

“I am expecting the wheat harvest to be sufficient for bread production provided exports are cut, but not enough for animal feed,” the wheat purchaser at a large German flour mill said.

“But we cannot rule out some German bread being made from French, Polish and Czech wheat in coming months.”

Reporting by Michael Hogan; Editing by Dale Hudson

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