THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 9/2/2010 GAIN Report Number: IT1038 Italy Post: Rome Crop Update 2010 Report Categories: Grain and Feed Approved By: James Dever Prepared By: Stefano Baldi Report Highlights: Most recent industry estimates forecast Italian MY 2010/2011 wheat production at 6.5 MMT (2.9 of soft wheat and 3.6 of durum wheat), barley at 961,000 MT and corn at 8.6 MMT. This is partly due to wet and stormy weather conditions during the months of May and June which have disrupted the harvesting and affected crop yields and quality. General Information: Most recent industry estimates forecast Italian MY 2010/2011 wheat production at 6.5 MMT (2.9 of soft wheat and 3.6 of durum wheat), barley at 961,000 MT and corn at 8.6 MMT. This is partly due to wet and stormy weather conditions during the months of May and June which have disrupted the harvesting and affected crop yields and quality. In addition, MY 2010/2011 has started with good stock levels due to farmers? waiting for higher prices before selling their MY 2009/2010 production. Soft wheat Despite bad weather conditions during the spring time, soft wheat yields and quality are estimated to be similar to those of MY 2009/2010 performances. The 1.7% reduction in planted area created a 1.9% decline in overall production; however the crop showed good protein content. After the 2008 price surge prices fell to minimum levels forcing farmers to shift to other crops. Right now the wheat market turmoil created by the Russian crisis has made farm gate prices go up, although they are still not high enough to cover all farm production costs. Sometimes profit margins are guaranteed only by CAP direct aid payments. Moreover, the Russian export ban shouldn?t affect Italian soft wheat balance sheet. In fact, Italy just imports a limited quantity (around 4%) of soft wheat for animal feed. Durum wheat Lower yields and quality have been recorded so far mainly due to heavy rain during the spring time which forced some farmers to stop cultivating their fields with fertilizers and pesticides. In MY 2010/2011 increasing areas were planted with durum wheat but estimated production is at 3.6 MMT, close to the MY 2009/2010 harvest. In addition the protein and gluten content are definitely lower than in previous years. Nevertheless, prices are rising following the soft wheat price increase trend which took place after the Russian ban. Corn In MY 2010/2011 corn planted in Italy is expected to drop slightly in favor of soybean but high yields (9-9.5 MT/ha on average) coming from good summer weather conditions should allow for an increase in production compared to MY 2009/2010. However, heavy rain during the spring time has delayed the harvest which is still a few weeks away and attention on weather conditions remains strong. Demand is not expected to change in MY 2010/2011 but increasing land is being dedicated to energy crops. Italian main cereals weekly farm gate price trend (Euro/MT) Source: ISMEA. PSD tables Wh te Estimate Forecast eat Estimatotal 2008/09 2009/10 2010/11 Marketing Year Begins 07/2008 07/2009 07/2010 Area 2,289 1,822 1,907 Beginning Stocks 1,670 2,264 1,686 Production 8,859 6,535 6,466 Intra EU27 imports 3,501 3,900 3,850 Extra EU27 imports 2,237 2,600 2,450 Total imports 5,738 6,500 6,300 TOTAL SUPPLY 16,267 15,299 14,452 Intra EU27 exports 1,743 1,810 1,700 Extra EU27 exports 1,050 920 910 Total exports 2,793 2,730 2,610 Food 8,817 8,855 8,800 Seed 543 428 404 Industrial 250 250 250 Feed 1,600 1,350 1,400 TOTAL consumption 11,210 10,883 10,854 Ending Stocks 2,264 1,686 988 TOTAL DISTRIBUTION 16,267 15,299 14,452 So imate Estimate Forecast ft wheat Est 2008/09 2009/10 2010/11 Marketing Year Begins 07/2008 07/2009 07/2010 Area 702 568 559 Beginning Stocks 570 600 686 Production 3,746 2,929 2,872 Intra EU27 imports 2,819 3,400 3,300 Extra EU27 imports 1,205 1,200 1,100 Total imports 4,024 4,600 4,400 TOTAL SUPPLY 8,340 8,129 7,958 Intra EU27 exports 111 110 100 Extra EU27 exports 27 20 10 Total exports 138 130 110 Food 5,609 5,605 5,600 Seed 143 108 110 Industrial 250 250 250 Feed 1,600 1,350 1,400 TOTAL consumption 7,602 7,313 7,360 Ending Stocks 600 686 488 TOTAL DISTRIBUTION 8,340 8,129 7,958 Durum Estimate Estimate Forecast wheat 2008/09 2009/10 2010/11 Marketing Year Begins 07/2008 07/2009 07/2010 Area 1,587 1,254 1,348 Beginning Stocks 1,100 1,664 1,000 Production 5,113 3,606 3,594 Intra EU27 imports 682 500 550 Extra EU27 imports 1,032 1,400 1,350 Total imports 1,714 1,900 1,900 TOTAL SUPPLY 7,927 7,170 6,494 Intra EU27 exports 1,632 1,700 1,600 Extra EU27 exports 1,023 900 900 Total exports 2,655 2,600 2,500 Food 3,208 3,250 3,200 Seed 400 320 294 Industrial 0 0 0 Feed 0 0 0 TOTAL consumption 3,608 3,570 3,494 Ending Stocks 1,664 1,000 500 TOTAL DISTRIBUTION 7,927 7,170 6,494 Co Estimate Estimate Forecast rn 2008/09 2009/10 2010/11 Marketing Year Begins 10/2008 10/2009 10/2010 Area 992 916 860 Beginning Stocks 1,100 1,300 650 Production 9,723 7,884 8,600 Intra EU27 imports 1,770 2,000 2,100 Extra EU27 imports 292 300 300 Total imports 2,062 2,300 2,400 TOTAL SUPPLY 12,885 11,484 11,650 Intra EU27 exports 23 80 20 Extra EU27 exports 37 20 20 Total exports 60 100 40 Food 200 200 200 Seed 30 34 26 Industrial 950 900 900 Feed 10,345 9,600 9,684 TOTAL consumption 11,525 10,734 10,810 Ending Stocks 1,300 650 800 TOTAL DISTRIBUTION 12,885 11,484 11,650 So Estimate Forecast rghum Estimate 2008/09 2009/10 2010/11 Marketing Year Begins 07/2008 07/2009 07/2010 Area 39 40 40 Beginning Stocks 0 0 Production 225 243 250 Intra EU27 imports 18 20 20 Extra EU27 imports 89 Total imports 107 20 20 TOTAL SUPPLY 332 263 270 Intra EU27 exports 5 8 5 Extra EU27 exports Total exports 5 8 5 Food Seed 1 1 1 Industrial Feed 326 254 264 TOTAL consumption 327 255 265 Ending Stocks TOTAL DISTRIBUTION 332 263 270 Oat Estimate Estimate Forecast 2008/09 2009/10 2010/11 Marketing Year Begins 07/2008 07/2009 07/2010 Area 148 134 117 Beginning Stocks 40 40 40 Production 356 314 285 Intra EU27 imports 22 30 30 Extra EU27 imports 3 Total imports 25 30 30 TOTAL SUPPLY 421 384 355 Intra EU27 exports Extra EU27 exports Total exports 0 0 0 Food 54 54 54 Seed 38 34 34 Industrial Feed 289 257 257 TOTAL consumption 381 345 345 Ending Stocks 40 40 40 TOTAL DISTRIBUTION 421 385 385 Abbreviations and definitions used in this report: Ha Hectare; 1 ha = 2.471 acres MT Metric ton = 1,000 kg MS EU member state(s) MY = Marketing Year. Post and USDA official data both follow the EU local marketing year of July to June except for corn which follows an October to September calendar. Sources used in this report: Istat Istituto Statistico Italiano/Italian statistical center ISMEA Istituto di Servizi per il Mercato Agricolo Alimentare/Center providing services for the agricultural and food market