French wheat exports to revive sharply - despite strong competition

14.09.2017

French soft wheat exports are to recover strongly from multi-decade lows, led by a dramatic rebound in shipments outside the European Union, and helped by the strong quality of this year's crop.

FranceAgriMer, in its first forecasts for French grains supply and demand in 2017-18, pegged soft wheat exports at 18.16m tonnes.

That represents a 60% jump from the 11.34m tonnes shipped last season, the weakest in at least 25 years, when supplies were depressed by a rain-ravaged June.

And the export recovery was seen as proving particularly strong in shipments outside the EU, which the official French crop bureau forecast more than doubling this season to 10.2m tonnes.

Strong competition

The forecasts come despite expectations for strong competition on wheat export markets this season, spurred by a record Russian harvest, upgraded by the US Department of Agriculture on Tuesday to 81.0m tonnes, including the durum wheat used in making pasta.

French wheat exports, and (volume of these shipped outside EU)

2017-18: 18.16m tonnes, (10.2m tonnes)

2016-17: 11.340m tonnes, (4.971m tonnes)

2015-16: 20.553m tonnes, (12.623m tonnes)

2014-15: 19.439m tonnes, (11.368m tonnes)

2013-14: 19.150m tonnes, (12.221m tonnes)

Source: FranceAgriMer

Russian all-wheat exports will hit an all-time high of 32.5m tonnes in 2017-18, an upgrade of 1.0m tonnes, the USDA said, lifting its forecast for Ukrainian shipments too, by 500,000 tonnes to 16.5m tonnes.

By contrast, the USDA downgraded by 1.0m tonnes to 28.5m tonnes its forecast for EU all-wheat exports, after crop setbacks from late rains in some countries, notably Germany, typically a key origin for higher quality wheat.

Indeed, EU soft wheat exports overall in 2017-18, at 2.72m tonnes as of September 5, are running 48% behind the pace of last year.

Slow start

Soft wheat exports from France, the top EU grain producer and shipper, have outperformed the bloc's average but – in rising 7.2% to 1.16m tonnes in July, the first month of 2017-18 – set a pace well behind that FranceAgriMer has suggested.

France's soft wheat shipments outside the EU, at 464,333 tonnes, dropped 29% year on year, undermined by weaker sales to African buyers, bar Mali, and the non-repeat of a large Indian order.

However, FranceAgriMer stressed the quality of the French crop, which showed an average protein level of 12.3%, with 91% of the crop boasting a protein concentration above 11.5%, a threshold used by many importers, such as Egypt.

The average specific weight came in at 77.2 kilogrammes per hectolitre, with about 75% of the crop above a widely-used threshold of 76 kilogrammes per hectolitre.

Protein in demand

Higher quality wheat looks like being in particular demand this year, after drought hits to crops in Australia, Canada and the US, typically sources of higher protein grain, and with the large Russian crop viewed as being short on higher specification supplies.

There is often some pay-off in wheat between yields and quality, with large crops viewed as tending to have "diluted" protein levels.

Indeed, consultancy Agritel restated on Wednesday that the quality of Black Sea harvests "is below last year's".

Russian volumes falling short?

Furthermore, there are ideas that squeezes on Russia's logistics will prevent exports reaching the levels forecast by the USDA, especially after a slow start to the season.

Agritel, while terming "impressive" the current pace of shipments from the former Soviet Union, aid that Russia's performance "does not seem sufficient to reach the objective of 31m-32m tonnes" for the whole of 2017-18.

Russia has exported some 5m tonnes of wheat in the first two months of the season, compared with 4.8m tonnes for the same period of 2016-17.

Durum, barley export growth

For durum wheat, FranceAgriMer forecast French exports rebounding 22% to a four-year high of 1.44m tonnes this season, led by a 92% surge to 400,000 tonnes in shipments outside the EU.

Barley exports were seen growing 29% to 6.79m tonnes, again led by a 48% surge to 3.50m tonnes in exports to non-EU countries.

French corn exports, of which nearly all are sent to other EU nations, were pegged at 4.47m tonnes, a rise of 290,000 tonnes year on year, with domestic feed needs seen rising too to help account for a harvest seen up 9.2% on last year at 12.29m tonnes.
    

Agrimoney

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