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Strategie Grains cuts EU wheat, barley crop forecast but sees rain relief

PARIS, May 16 (Reuters) - Crop consultancy Strategie Grains has again cut its forecast for this year's wheat and barley production in the European Union, partly due to drought in Hungary, but said recent rain across the EU had eased dryness and left decent harvest prospects.

In a monthly cereal report published on Thursday, the French firm reduced its projection for EU soft wheat production in the upcoming 2019/20 season to 143.9 million tonnes from 144.8 million forecast in April.

That would be 13 percent above last year's drought-hit EU wheat harvest.

For barley, expected production in 2019/20 was cut to 60.3 million tonnes from 61.0 million, 8 percent above the 2018/19 output.

"Harvest outlooks remain good and the EU's harvests of wheat, barley and maize are all still expected greater than last year," Strategie Grains said in its report.

"Rains arrived in late April/early May, lifting earlier concerns across much of the EU although some pockets of drought persist in central and north EU countries.

"Nevertheless, this month we revise down our harvest forecasts by almost 1 million tonnes for wheat and by 700,000 tonnes for barley, reflecting smaller acreage than previously envisaged in Denmark and Czech Republic, and drought damage in Hungary."

Limited rain in recent months has left some European grain belts parched, accentuating low moisture levels after drought last year.

Strategie Grains also cut its wheat and barley crop forecasts last month, citing dry weather.

But showers across Europe in the past month have boosted expectations for large harvests in the northern hemisphere this year, contributing to a pullback in prices that has seen Paris wheat futures hit contract lows.

The price fall could reinforce a shift towards wheat and barley in animal feed rations, after heavy use of maize (corn) this season that has fuelled record EU maize imports, Strategie Grains said.

This would help reduce EU barley stocks next season to a balanced level, but wheat stocks were expected to remain high as stiff competition from rival exporters like Russia and Argentina were seen limiting growth in EU wheat exports, it said.

Strategie Grains reduced slightly its 2019/20 EU production forecast for maize to 62.9 million tonnes from 63.1 million last month, a 2 percent increase on 2018/19. (Reporting by Gus Trompiz; Editing by Mark Potter)

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