Summer 2021 edition
Progress of the COVID-19 vaccination campaign allows the reopening of the foodservice sector and easing of travel restrictions in the EU. This should have a positive impact on the summer tourism season and on EU food consumption overall. This confirms the positive prospects anticipated in the Spring 2021 Short-term Outlook (STO). Uncertainties remain however, regarding the capacity to control the spread of the Delta variant of the COVID-19 virus, and the possible impact of this variant for vaccinated people.
Market outlooks are provided for the EU-27; EU-28 historic data is maintained and updated as revisions are received. In addition to the short-term outlook, the Commission also publishes associated documents, including statistical annexes and balance sheets.
COVID-19 daily-confirmed cases currently follow a downward trend in most countries worldwide – including Argentina, Canada, India, Japan and the US – and in the EU. Overall, vaccination campaigns in EU countries continue to progress jointly.
The economic recovery is already underway and is stronger than previously forecast. However, uncertainties and economic risks will remain for as long as the health crisis lasts, emphasising the importance of the swift progress, efficiency and effectiveness of vaccination campaigns worldwide.
Energy prices should continue increasing throughout 2021, getting closer to pre-COVID-19 levels. For oil and gas, the increased demand meets controlled supply.
Prices for the main arable crops continued their rally over the spring. High demand from China on several commodities, high demand from the US biodiesel industry and uncertainties around production levels and trade practices put world prices on an upward trend. FAO food price index in May reached its highest value since September 2011 but global prices eased since then thanks to a slight increase in ending stocks.
In 2021/22, EU cereal production could increase at 288.7 million t (+4% year-on-year). Similarly, EU oilseed and protein crops production could reach 30.1 million t (+9.5%) and 4.6 million t (+6.7%), respectively. EU domestic consumption could increase as well, especially in feed cereals (+0.5%) and vegetable oils. While EU imports of cereals could decline, oilseed imports are expected to remain high (+17%/5-year average).
EU sugar beet production could reach 110 million t (+11 year-on-year) in 2021/22. Sugar production could increase by 1 million t compared to 2020/21, to 15.5 million t.
Production of EU biofuels is expected to grow in 2021 as demand for transport fuels rebounds. Biodiesel production should be fuelled by used cooking oil and other waste feedstock, while bioethanol should grow mainly thanks to wheat and maize.
Despite an increase of EU olive oil production in 2020/21, growing exports and the recovery in domestic demand (+5%) are expected to contribute to reducing stocks which are expected to fall below 2017 level. Thanks to these developments, EU prices of extra virgin olive oil already reached above-average levels in Spain, Italy and Greece.
Despite an EU wine production above average in 2020/21, stocks are expected to be stable, driven by a recovery of the domestic wine consumption after the record low consumption in 2019/2020, an increased use of vinified production for ‘other uses’ including crisis distillation, and growing exports. While the EU production of fresh tomatoes continues the declining trend since 2016, the production of tomatoes for processing, driven by a strong demand and low stocks, is due to grow by 9% in 2021.
Production of peaches and nectarines in the EU is at a record low for the second consecutive year due to adverse weather conditions. In 2020 the EU production reached its lowest level since 2004. In 2021 it is expected to further drop by 20%.
Milk and dairy products
The EU milk collection dropped in the spring due to cold weather that delayed the seasonal peak. Rainfall in May should support grass quality and availability in the upcoming months leading to an expected growth recovery of around 2% in May-June and an increase of EU milk collection by around 0.8% in 2021. Yield could grow at a lower pace than in 2020 (1.6%) due to a slow start at the beginning of the year while cows’ slaughtering could accelerate towards the end of the year and result in a dairy herd reduction of around 0.9%.
EU dairy prices continue improving, mainly due to the Chinese demand which drives world prices. This should support raw milk prices and to some extent offset rising feed costs.
The EU butter and SMP production could recover after a drop at the beginning of the year during which cheese was a preferred option, together with whey for which export demand remains strong. Despite an expected drop in the EU consumption, drinking milk production could remain stable due to an increasing import demand from China.
EU beef production is expected to decrease in 2021, mainly due to a reduction of cow herd in the beef and dairy sector combined with lower demand from foodservices. Exports to high-value markets should continue to increase thanks to recent trade agreements (e.g. Canada, Japan) and while other destinations show a small decline, despite the shortage of beef at world level.
EU pigmeat production is expected to continue increasing in 2021, as additional production in some EU countries more than compensated the decrease due to ASF in Germany. Although the exports to UK are strongly reduced, overall EU pigmeat exports should grow again in 2021.
As AI hits major EU poultry producers including Poland, EU production is expected to decrease in 2021. Demand is not expected to rebound sharply with the reopening of foodservices and overall exports should decrease. Despite high prices, margins are under pressure because of high feed costs.
The EU sheep meat market faces strong global and domestic supply shortages (EU production being stable), leading to relatively high prices. Exports from New Zealand are partly redirected to Asia, while facing at the same time higher shipping costs. The current trade situation between the EU and the UK adds downward pressure on exports and imports.