EU wheat exports to fall, despite stronger harvest - Strategie Grains

15.09.2017

European Union soft wheat exports will fall this season, despite an increased harvest, Strategie Grains said, warning of the threat posed by former Soviet Union shipments after a huge Russian harvest.

The influential analysis group cut by 1.3m tonnes to 23.1m tonnes its forecast for soft wheat exports from the EU, the world's largest shipper, in 2017-18.

The downgrade took the figure below last season's figure, which it pegged at 24m tonnes, although that is below the official estimate from the European Commission (which sees exports rising by some 1m tonnes this season).

And it came despite an upgrade of 1.5m tonnes, to 142.5m tonnes, in Strategie Grains' estimate for the EU soft wheat harvest this year, taking the figure 6.5m tonnes above last year's result.

Russia, Ukraine exports

The weakened export hopes reflected in part the disappointing harvest in Germany, typically a key EU shipper of higher protein wheat, but which saw the quality, and volume, of its crop hurt by late-season rains.

Prospects of another, relatively, weak EU corn harvest, pegged at 59.0m tonnes, have also supported opportunities for feed uses for wheat within the bloc.

However, Strategie Grains also flagged the threat to EU wheat shipments from Russia and Ukraine, particularly to volumes France, the bloc's top wheat-producing and exporting nation.

French dynamics

The estimates follow a weak start to 2017-18 for EU soft wheat exports, which as of September 5 had reached 2.72m tonnes, a drop of 48% year on year.

They also come the day after FranceAgriMer - in its first forecasts for French soft wheat shipments for the season, which started in July - pegged them at 18.16m tonnes, a recovery of 60% on the previous season's levels, which were undermined by a rain-hurt harvest.

The FranceAgriMer figure included an estimate of 10.2m tonnes for shipments outside the EU – more than double volumes achieved in 2016-17, but weaker than trade seen in the previous three seasons.

'Strong and weak'

This forecast for shipments outside the EU was questioned by some observers, with US broker Benson Quinn Commodities saying that "at their current values, [France] won't find that type of demand".

Olivia Le Lamer, head of FranceAgriMer's grains unit, said it was an estimate that could be perceived as both "as strong and weak".

It was "not very high if you look at available supplies, but quite high in light of [French wheat's] competitiveness at current prices".

Although the unusually strong quality of France's harvest is offering support to export hopes, she added that "our presence on the world market is not guaranteed because volumes in Russia are unheard of and, at this point, there is no reason to doubt the quality of their grain".

Quality divides

Strategie Grains underlined the strong quality of this year's French soft wheat crop, while viewing as adequate the milling specifications of harvests in central Europe, the Baltic States and Scandinavia.

In malting barley, quality was also best in France, along with Scandinavia and the UK, while appearing disappointing in the Czech Republic, Germany and Slovakia.


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