Sweden's summer drought slashes 2018 crop output forecast

[STOCKHOLM] Drought over the summer has led to sharply lower yield prospects for Sweden's cereal and oilseeds harvest this year, the public agricultural agency said on Monday.

The Swedish Board of Agriculture, which acts as the government's expert authority for agricultural and food policy, estimated total cereal production would be 29 per cent lower year-on-year at 4.2 million tonnes in 2018.

For oilseeds, it estimated a harvest of 0.2 million tonnes, 44 percent lower than the previous year.

"The reason for the lower total production of cereals estimated for 2018 is the rainy autumn and a late spring but most importantly this year's summer drought," the agency said in a statement. 

Severe weather, with hot, dry conditions have led to parched field conditions in northern European countries such as Sweden and have prompted cuts to the yield forecasts for EU cereal and rapeseed harvests this year.

Sweden has experienced one of its warmest summers, with temperatures between three and five degrees Celsius higher than normal in July and in most places the highest on record, the Swedish Meteorological and Hydrological Institute says.

The heatwave and wildfires have made the environment to a major issue for voters as the September general elections approach. The government has promised 1.2 billion Swedish crowns (S$179 million) in aid to drought-hit farmers.

Cereal and cereal products, mainly dominated by barley, oats and wheat, are Sweden's main agricultural exports.

SEB chief economist Robert Bergqvist said in a client note that Monday's harvest forecast could play a major role in revisions to growth and inflationary risks in coming months.

On Thursday, Sweden's centre-left government lifted its economic growth forecast and said it was likely to be 2.9 per cent this year, rather than the 2.6 per cent previously predicted.

REUTERS