The European Commission announced Thursday that weekly wheat exports hit 81,908 MT for the week.
In fact, it’s the third-lowest weekly figure over the last three years…
While France saw a small uptick in weekly exports, other key countries like Germany, Romania, and Poland are looking at a rough patch. EU sales for the year are off 19% from last year. This – once again – is part of the broader shakeup for European producers as the world turns more and more to Russia and Argentina for supply.
Strategie Grains moved on the trend yesterday, noting that EU wheat prices are too high compared to those sold by Argentina and the Black Sea competitors. Strategie expects that EU soft wheat exports in 2017/18 will come in at 21.4 MMT. That figure was a 300,000 cut from the firm’s previous estimate.
The group also cut its 2018/19 EU wheat export estimates by 300,000 MT to 24.1 MMT.
Reuters covered this story for a few sentences on Thursday and reached out to an unnamed futures dealer, who said: “It’s not a pretty picture for French farmers. There’s going to be a huge carry-out (stock) unless the picture alters significantly.”
With export demand sluggish, the EU will require strong feed demand to help offset a rise in inventories. Right now, the signs are pointing to that possibility as weather concerns in Argentina and Brazil are complementing higher prices in Ukraine.
But – as we noted earlier this week – many farmers aren’t taking chances with the export trend. Higher stocks bring lower prices, which produce lower incentives to plant, and ultimately lower acreage.
Strategie Grains cuts forecast for EU wheat exports – again
Strategie Grains cut its forecast for European Union soft wheat exports again, this season and in 2018-19, citing strong competition from Russian and Argentine supplies, following on from a cut to France’s official estimate.
The influential analysis group downgraded its estimate for EU soft wheat exports in 2017-18 for a fourth successive month, this time by 300,000 tonnes to 21.4m tonnes.
The revision – which took the estimate further below the 25.1m tonnes in exports initially expected for this season, and the 24.1m tonnes achieved in 2016-17 – reflected further concerns over the competitiveness of supplies from France in particular, the EU’s top exporting country.
For 2018-19, which starts in July, Strategie Grains lowered its estimate for EU shipments by 300,000 tonnes to 24.1m tonnes, expecting a recovery to last season’s levels, but no increase back to the bumper total of 2015-16 when the bloc was the world’s top wheat exporter.
“French wheat is too expensive” compared with Argentine supplies in Algeria and Black Sea origin in Africa as a whole, Strategie Grains said.
As an extra setback to prospects, “producers in Poland remain reluctant to sell their wheat”.
The comments come the day after FranceAgriMer, the official French crop bureau, cut its forecast for French exports outside the EU by a further 300,000 tonnes to 9.0m tonnes, also highlighting the competitiveness of Black Sea supplies.
“France is struggling to match world prices,” said Remi Haquin, the head of FranceAgriMer’s grains committee.
“With farmgate prices at less than E140 a tonne, it’s tough for farmers to sell.”
Argentina’s march into Algeria
Indeed, Mr Haquin flagged the potential for further downgrades to FranceAgriMer estimates should trade not pick-up.
“We’ve let export sales pass us by and if we don’t win some fresh business quickly we might have to lower the export outlook again and increase stocks further,” he said.
FranceAgriMer on Wednesday raised by 372,000 tonnes to 3.25m tonnes its forecast for French soft wheat stocks at the close of this season.
It noted that Argentina’s wheat exports to Algeria in the first six months of 2017-128 were “up sharply”, to 864,000 tonnes from 152,000 tonnes a year before.
Russia’s overall exports had soared by 3.87m tonnes to 17.5m tonnes in the July-to-November period.
Separately on Thursday, Russia said, according to an Interfax report, that it expected to harvest no less than 110m tonnes of grain this year – a historically strong figure, if one well below the 134.1m tonnes achieved last year.
For the EU, Strategie Grains forecast a 141.7m-tonne soft wheat harvest, an upgrade of some 100,000 tonnes from last month, and a figure only down 100,000 tonnes year on year.
“The growth in world import requirements should be favourable to a potential increase in EU exports in 2018-19,” the Paris-based group said.