EU poised to dethrone US as world's top wheat exporter
The European Union is likely to surpass the United States to become the top world wheat exporter next season as high freight rates help EU suppliers tighten their grip on nearby markets in the Middle East and expand sales in Asia.
A rise in freight costs has hurt U.S. sales to importers such as Egypt, the world's top wheat buyer, while its shipments to another buyer, Iran, have been affected by political tension.
"There is no such thing as a captive market in the international grains trade, and the U.S. has the handicap of higher ocean shipping costs to the big African and Middle Eastern buyers," a European grain trader said.
Political tensions with Iran have not helped.
"The long-term political friction between Iran and the U.S. meant Iran bought from the U.S. only when its back was against a wall. Germany, and so the EU export figure, benefited from this," one European trader said.
The U.S. Department of Agriculture has forecast that U.S. wheat exports in the 2014/15 season will total 25.2 million tonnes, the smallest volume in five years. It expects the European Union to ship 28 million tonnes, its second-highest volume after a record 30 million in 2013/14.
U.S. wheat exports have been in long-term decline since the early 1980s, when they peaked at more than 48 million tonnes, as wheat has lost favor with U.S. farmers in part because of biotech advances in corn and soy crops.
"We've seen a huge rise in exports by Romania in the past few years as several multi-national trading houses increase origination purchases there," one European trader said.
"They (Turkey) will be requiring imports for their milling and flour export industry," said Sarah Nightingale, an independent consultant and former trade policy manager for the Grain and Feed Trade Association (GAFTA).