The European Union’s leap to the top of the world wheat exporter’s league will be a little less dramatic than had been expected thanks to the drop in oil prices, according to Strategie Grains.
The analysis group cut by 2.5m tonnes to 30m tonnes its forecast for EU soft wheat shipments in 2014-15 – a downgrade which brings to an end a run of improves estimates for the bloc’s exports.
The Paris-based consultancy had in the previous two months raised its estimate for exports by more than 5m tonnes, while the US Department of Agriculture on Tuesday upgraded its forecast for overall wheat shipments, including the durum variety used in making pasta, by 500,000 tonnes to 31.5m tonnes.
Separately on Thursday, FranceAgriMer lifted by 600,000 tonnes to 10.4m tonnes its forecast for wheat shipments outside the EU from France, the bloc’s top grower and exporter of the grain.
EU export prospects have been supported by, besides a strong harvest last year, weakness in the euro, which on Thursday hit a 12-year low against the dollar, further improving the affordability of eurozone exports.
“The evolution of prices in France, Germany and Poland have allowed these origins to stay competitive on the world market,” Strategie Grains said.
‘Limiting purchasing power’
However, the decline in oil prices has dented prospects for purchases by importing countries whose economies are largely reliant on crude.
Major oil exporters such Algeria, Nigeria and Sudan, besides the Middle East, are major wheat importers.
“The drop in crude oil prices over the last several months… is limiting the purchasing power of several countries,” Strategie Grains said.
‘Getting heavy again’
The export slowdown, combined with some switch to corn from wheat by livestock producers, will see EU soft wheat inventories end 2014-15 above 18m tonnes, some 4m tonnes higher than previously expected.
The inventory “situation is therefore getting heavy again, notably for the main exporting countries, Germany and France, but also in the UK”.
The group forecast EU stocks reaching 20m tonnes at the close of 2015-16, despite trimming by 100,000 tonnes to 140.4m tonnes its forecast for this year’s soft wheat harvest.
A harvest at that level would represent a drop of 8.4m tonnes year on year.
‘Fast pace of shipments’
The USDA on Tuesday, in upgrading its forecast for EU all-wheat exports to a record 31.5m tonnes, cited a “fast pace of both shipments and export licenses”.
It added that “the EU has a record crop and is the world’s most competitive supplier”, with exports from France, the bloc’s top exporter, “priced below Black Sea [offers] for much of the season, due in part to lower-than-average quality”.
And with trade from the former Soviet Union “expected to plunge on Russia’s export duty and Ukraine’s voluntary export limits”, the EU looks well-placed to fill the void.
“The US is unlikely to fill the gap due to uncompetitive prices and a strengthening dollar,” the USDA said.
The USDA highlighted “recent EU sales to Algeria, Egypt, and Morocco”, much of which trade has gone to France – although not as much as usual, thanks to the disappointing quality of last year’s harvest.
Even FranceAgriMer’s upgraded 10.4m-tonne forecast for France’s 2014-15 exports is below the 12.22m shipped last season.
France had as of January, the seventh month of 2014-15, exported 9.9m tonnes of wheat, of which 5.3m tonnes were shipped outside the EU – a figure down 23% year on year.
(Source – http://www.blackseagrain.net/novosti/oil-price-fall-cuts-hopes-for-eu-wheat-exports)