BRUSSELS: Cheap wheat supplies in the European Union are attracting brisk export demand at the end of the 2015/16 season, including French shipments to Asian markets, which could help the EU bring down hefty stocks after a record harvest last year.
The 28-country bloc is collectively the world’s biggest wheat grower and exporter.
But a slow start to its export campaign, with the exception of Baltic states, and then disruption to trade with top importer Egypt had threatened to leave the EU with a wheat glut.
EU export demand has since picked up sharply in the final months of the July-June season, helped by lower prices, declining availability of Russian and Ukrainian wheat, and a surge in imports from drought-hit Morocco.
The volume of soft wheat export licences awarded by the EU in 2015/16 is still trailing last season’s record level, but it is now only 5 percent lower compared with a 15 percent lag in early March.
Consultancy Strategie Grains raised its monthly estimate of EU soft wheat exports in 2015/16 by almost a million tonnes.
“The current pace of EU export licences is very strong and we could export as much as last season,” Paul Gaffet, an analyst with ODA Groupe, said.
“Stocks are still large, though, after last year’s harvest which was a record crop after all.”
In France, the EU’s biggest wheat exporter, farm office FranceAgriMer has raised its forecast for soft wheat exports outside the EU by 1 million tonnes over the past two months to 12 million. ODA sees French non-EU exports reaching 12.5 million tonnes.
A season’s high of 1.6 million tonnes of soft wheat was loaded at French ports in April and May could generate a similar volume with 1.1 million tonnes already handled by May 20, data compiled by Reuters showed.
Import terms, however, could shape the size of French exports. Traders say they are still waiting for confirmation Morocco will extend reduced tariffs beyond a current end-May deadline.
Interest in French wheat from Indonesian importers has been hampered by delays in defining food safety procedures, which traders link to diplomatic tensions over a planned French tax on palm oil.
Potential trade with India, where buyers have reportedly booked up to 150,000 tonnes of French wheat, could be slowed by local sanitary regulations.
EU countries are nonetheless set for more brisk sales, a trend that could continue this summer as new-crop EU prices look more competitive than usual against Black Sea rates, and with farmers set to hold over sizeable supplies from this season, traders said.
A fall in the euro against the dollar has also reinforced EU export prospects.
“Loadings in Germany and Poland are substantial and I estimate Germany will export about 750,000 tonnes of wheat in May to third countries with Saudi Arabia, Iran, Yemen and Kenya the main buyers,” one German trader said.
“Germany had been facing competition from US hard red winter wheat in the Saudi market but I think the euro’s weakness this week put Germany back in the picture.”
