Strategie Grains lowers bar on EU wheat export hopes - again

20.04.2018

Strategie Grains lowered the bar, again, on expectations for European Union soft wheat exports this season, and curbed hopes for the recovery in 2018-19 too, despite seeing a benefit to crops from improved weather.

The influential analysis group cut by 900,000 tonnes to 20.3m tonnes its forecast for EU soft wheat exports in 2017-18 - a sixth successive monthly downgrade, and taking nearly to 4m tonnes the decline it expected year on year.

The downgrade was attributed largely to continued strong competition from Russia, after its record harvest last year.
 
And it reflected in the main worsened prospects for shipments from France which - while still set to regain its place as the EU’s top wheat exporter after a poor harvest took it behind Germany and Romania last season – was seen managing shipments of only 8.0m tonnes to countries outside the bloc.

North African trade

That alone represented a 500,000-tonne downgrade, and took Strategie Grains’ forecast below that of FranceAgriMer officials, who last week cut their forecast by 200,000 tonnes to 8.30m tonnes.

Strategie Grains, in particular, reduced expectations for the recovery in French exports to Morocco, a key North African market, contrasting with FranceAgriMer ideas last week that strong demand from Algeria and Morocco should allow the bureau’s reduced 8.3m-tonne target to be met.

France had, as of the end of February, shipped 497,721 tonnes of soft wheat to Morocco this season, up from 91,173 tonnes in the same period of 2016-17, with shipments to Algeria up 113%, at 2.79m tonnes, customs data show.

However, rail strikes have placed a could over future export prospects, hampering delivery of crops to port, with Agritel warning on Thursday that French “logistics could remain difficult until the end” of the season.

This when “port line-ups are increasing with a significant wheat loading programme for Algeria as well as feed barley for Saudi Arabia”.

Forecast comparison

Strategie Grains’ forecast for EU soft wheat exports of 20.3m tonnes this season compares with an estimate from the European Commission of a 23.0m-tonne campaign, while the International Grains Council puts it 21.9m tonnes.

For 2018-19, Strategie Grains downgraded its forecast by 500,000 tonnes to 24.1m tonnes, meaning that they would not recover back even to 2016-17 levels, which were sapped by France’s dismal 2016 harvest, let along the above-30m-tonne level seen the previous season.

The analysis group’s forecast flagged in the potential for a recovery in German volumes, after a poor harvest last year, and competitiveness of Romanian origin, and a harvest of 141.0m tonnes, downgraded by 100,000 tonnes month on month, despite hopes for the arrival of spring.

"Spring weather finally arrived in the EU in early April, with a significant temperature lift,” the group said adding that “this should improve growing conditions for the winter cereals across most of Europe".

USDA data

With the forecast for EU durum production this year kept at 9.1m tonnes, Strategie Grains forecast an overall wheat harvest of 150.1m tonnes, down 700,000 tonnes year on year.

Separately, US Department of Agriculture bureaux in Europe, in their first forecast for EU all-wheat output this year, pegged it at 151.2m tonnes, a drop of 350,000 tonnes year on year on their estimates.

“A wet fall across much of the European Union saw some disruption to winter plantings,” the bureaux said in a report.

“However, a mild winter saw the crop develop generally well,” while a “cold snap in late February was broadly welcomed and bodes well for reducing pest occurrence and disease incidence… with limited winterkill”.

‘Stiff competition’

The bureaux pegged at 24.0m tonnes the EU’s all-wheat exports this season –including durum shipments, typically end up at 1.1m-1.4m tonnes – with volumes in 2018-19 pegged at 26.5m tonnes.

“While exports are forecast to continue to face stiff competition, especially from Russia, they are currently forecast to increase by 2.5m tonnes from their expected five year low in 2017-18.”


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