Hungary: Winter Crop Production Drops after Two Consecutive Bumper Harvests; Corn Yields Expected to be Good, Sunflower Production May Reach New Record

Much of the information in this report was obtained during crop travel in Hungary by staff of PECAD and FAS Budapest during the second week of August 2006. Also included are crop travel pictures.

Hungary’s 2006/07 grain output is estimated by USDA to be lower than both the 2004/05 record and the 2005/06 bumper harvests.  Detrimental winter and early spring weather lowered yields of autumn-sown crops but the principle summer crops of corn and sunflowerseed are expected to have done well, with sunflowerseed estimated at record production this season.   Weather was nearly ideal in September and by the beginning of October about 65 percent of sunflowerseed crop had been harvested and 6-7 percent of the corn crop had been harvested. 

Wheat and Barley
USDA's October estimate for Hungary is 1.1 million tons of barley and 4.4 million tons of wheat in 2006/07.  Both of these harvested winter-crop totals are well below the last two bumper years, and also below the five-year average.  Harsh, winter weather and a less-than-ideal spring made development difficult for winter crops but these factors did not adversely affect spring-planted summer crops.  Europe's 2006 spring season was very short, constrained by a long winter and a hot early summer.

Corn
The USDA’s October estimate for 2006/07 Hungary corn production is 8.0 million tons, which is 1.0 million below last year’s record crop, but 0.8 million above the five-year average.  The season’s crop developed under nearly ideal conditions until June when high temperatures prevailed throughout Hungary and the rest of the continent.  Any adverse effects from the heat however, were largely mitigated by adequate soil moisture reserves.  Soil moisture levels were high because of considerable spring and early summer rainfall.  During the early-August crop tour soil moisture was high, and the corn crop appeared to be developing well, but not exceptionally well. September weather was near ideal

Oilseed Production
Hungary’s oilseed production is comprised primarily of sunflowerseed and rapeseed, estimated at a record 1.25 million and a record 0.33 million tons respectively in October 2006/07. 

Sunflowerseed
The sunflower crop in Hungary has developed well this season and could reach a record production of 1.25 million tons.   Sunflowers, which are sown in April and May are estimated to yield 2.34 tons per hectare from a record .535 million hectares.  This is above the 2.08 ton per hectare average, and above last year’s 2.25 yield.  Continued increases in hybrid use has contributed to improved yields. The crop was observed to be in very good condition during early August. There were no pollination or apparent disease problems.  Early season rainfall greatly aided the crop’s development.  Heads were full and soil moisture was adequate. 

Rapeseed
Winterkill was moderate, leading to 140,000 hectares of planted rapeseed, 20,000 higher than last year.  An abbreviated spring and early summer dryness had little adverse effect, rapeseed yields are expected to reach a high 2.36 tons per hectare. This is above the 1.97 tons per hectare average and similar to last year's 2.33. 

Rapeseed and Its Complexities
Rapeseed is a delicate crop, requiring specific climatic conditions and careful harvesting procedures to ensure its success. As one producer stated, “it takes a very dedicated farmer to grow rapeseed.” Losses in individual rapeseed fields can be very high. The best yielding varieties tend to be short plants, planted with large row separation between them.  This situation allows the bushy rape plant a competitive edge as it spreads-out horizontally, overgrowing weeds and depriving them of sunlight. In Hungary, the optimal seeding period begins at the end of August and lasts through the first ten days of September.  Late sowings risk the plant’s survival because a less-developed plant is especially susceptible to winterkill.  Problems can also occur if plants are sown too early in the fall, or if autumn temperatures are especially warm.  Under these circumstances, plants may develop excessive biomass, which can suffocate under heavy winter snow.  Another issue faced by rapeseed growers deals with the ripening of oilseeds within the pod.  Because seeds within an individual pod do not all ripen at once, it is typical to spray a desiccant on plants when they are near 35 percent moisture. This action dries down plants, ripens all the seeds at once, and allows harvesting to begin.  Rapeseed harvesting is best undertaken at dawn and the early morning hours when air is the dampest.  Moisture in the air helps reduce harvest losses by keeping pods firm, thus preventing pods from opening and spilling their seeds during the harvest.   Strong winds are exceptionally devastating during the dry-down stage of the crop.  Wind can rip dry pods apart, spilling their seeds onto the ground. Unreachable to the harvesters, these seeds are lost.

Intervention Stock
The European Union’s intervention system provides price stabilization because it sets a guaranteed price to be paid for grains, including bread wheat, barley, and corn, if certain minimum quality requirements are met.  Typically intervention is the most attractive option for Hungary’s corn traders and often to its wheat and barley suppliers as well.  High costs associated with transporting the harvested crop beyond the landlocked country’s borders to Black Sea ports in Romania dissuade open market purchases.  This is unlike Western Europe where intensive logistical systems and transportation infrastructure exist, making transport less expensive and more available than in Hungary.

Half of the EU’s intervention stock is comprised of Hungarian grain. Since Hungary joined the EU in January 2004, its corn surplus has been accumulating in the EU’s intervention silos.  It was commonly thought that after several consecutive bumper crops, there would be a lack of storage capacity.  However, businesses responded by building large facilities to house the increased output.  In addition, this year’s crops have been pared back from the past two years’ levels, lessening demand for storage space. Speculation has increased about the future of corn intervention, including reducing the intervention price or the complete elimination of the commodity from the intervention program. Another complexity of the corn supply dilemma will be how the EU will deal with two additional corn-producing nations, Romania and Bulgaria, when they join in 2007. 

Many commodity analysts in Hungary (and the EU) see ethanol as the solution for eliminating the mounting corn surplus, with its expensive purchases by EU intervention agencies. This scenario however, has also created concerns about future corn shortages and price increases.  If much of the corn crop is pre-contracted to biodiesel plants, Hungary could be forced to import feed corn at increased cost to consumers.

While the majority of Hungary’s contribution to intervention stores is corn, another 20 to 25 percent is wheat.  Hungary typically produces significant quantities of bread-quality wheat.  Wheat prices were unusually high this season (higher than intervention prices), keeping much of the wheat out of intervention bins. 

Crop Travel Pictures

Current USDA area and production estimates for grains and other agricultural commodities are available on PECAD's Agricultural Production page or at PSD Online.