European Union wheat exports have surged in the early part of the 2021/22 season as strong importer demand, a falling euro and high Russian prices boosted EU shipments.
Full-season prospects are more uncertain given question marks over a rain-hit French harvest, Russian export curbs and soaring shipping costs.
But the tailwind for EU exports could last until midway through the July-June season when the arrival of southern hemisphere supplies stiffens competition, traders said.
Higher EU exports had been expected with a bigger EU common wheat crop, which the European Commission estimates to be around 12% above last year’s volume.
But exports have increased much more rapidly. Latest EU data shows exports of common wheat, or soft wheat, running 45% above the year-earlier level at 8.1 million tonnes, led by Romania, Bulgaria and Germany.
Traders say the actual pace is even faster because of delays in processing data on French exports, which loadings suggest are double the 700,000 tonnes reported by the Commission.
In France, exporters have adapted to the rain-spoiled harvest by sorting grain and negotiating revised quality specifications with importers.
“The real issue was that we had a decline in quality along with a drop in quantity,” Alain Charvillat, cereal export director at French port silo operator Senalia, said, noting a 2 million tonne fall in production estimates between July and September.
Relaxed quality terms have let traders execute previous sales to China and fuelled talk of further deals, while also allowing some shipments to Algeria.
Exporters are now waiting to see if Moroccan buyers will also adjust quality terms for the country’s upcoming import window.
A rare shipment to the Philippines has raised the prospect of more French exports to Asia for livestock feed, although shipping costs may limit flows.
Germany has seen heavy exports to Algeria after the French harvest setbacks, although a rise in its export premiums may now favour Polish sales, traders said.
The high EU export tempo may not be sustainable, however.
“Some in the market are now asking if the EU could even need imports of high-quality wheat before the 2022 harvest if the current EU export pace continues,” one trader said.
Source: Reuters (Reporting by Gus Trompiz and Michael Hogan;Editing by Elaine Hardcastle)