Wheat exports from the European Union have started the season with a bang, but it may not last long.
Data from the European Commission show export licenses have been issued for 5.06 million tons of wheat in the season that started July 1 — the fastest start to any season in records dating back to 2004. Buyers have now stocked up on supplies they need and the poor quality of the harvest means wheat from France and Germany won’t be competitive compared with Russia and Ukraine, analysts said.
“Buyers have been stocking up wheat from the EU, but it isn’t necessarily going to continue for the whole season, said Amy Reynolds, a senior economist at the International Grains Council in London. “There is a lot of availability elsewhere and there will be a lot of competition.”
Heavy rains led to a poor harvest in France and Germany, which will cause exports to slow, with the IGC predicting a 25 percent drop this season to 25.5 million tons. At the same time, wheat from the Black Sea region, where good weather led to a bumper crop, is often cheaper for buyers.
Russia dominated sales this year to Egypt, the world’s biggest wheat buyer, and the country is looking set to cement its position as the top exporter for the second year. The Institute for Agricultural Market Studies, or Ikar, raised its estimate for Russia wheat exports earlier this month, predicting a record 30 million tons for 2016-17.
Traders will get the next update on European wheat exports on Thursday. In the week ended Sept. 6, licenses were issued to export 520,824 tons, European Commission data show. That’s a 47 percent increase from a year earlier.
Source: BloombergPrevious Next