EU wheat exports set to hit records as competition wanes
Brisk world demand and shrinking supplies, notably in competing Black Sea countries, are likely to drive soft wheat exports from the European Union to record highs this season, beating earlier expectations.
Romania's massive and rare sales to Egypt and significant volumes of French wheat shipped to unusual markets such as Mexico and Syria have led forecasters to lift their EU soft wheat export forecasts to 23-25 million tonnes, far above the record 22 million shipped in the 2008/2009 season.
"We have dynamic exports, Black Sea availabilities waning faster than expected and lower South American supplies, which could shift some demand to the EU," Pierre-Antoine Allard, an analyst with French consultancy Agritel, said.
Agritel lifted its wheat export forecast for the 28-member bloc to 23 million tonnes, up 2 million from its October estimate and compared with 19.5 million in 2012/13.
The U.S. Department of Agriculture (USDA) also raised EU wheat exports estimates to an equivalent 23 million tonnes of soft wheat, up 1 million from its figure last month.
"We are heading for a record year for sure," Allard said.
European traders are even more optimistic, putting forecasts at around 25 million tonnes.
"Availability of wheat in the Black Sea is almost wiped out, the pace of U.S. wheat sales is already hefty, Australian wheat should go to Asia and Canada's record crop is facing logistical problems getting out," one European trader said.
"On paper the EU can export 25 to 26 million tonnes."
Russia and Ukraine, one of the EU's toughest competitors, have harvested lower amounts of quality wheat this year.
This has led to a hefty pace of European wheat exports, notably Romanian wheat. EU operators have booked export licences for 11.8 million tonnes up to last week, or nearly 50 percent more than at the same time last year.
France To Egypt Key
Paris-based wheat futures hit seven-month highs, supported also by fears that Argentina's crop would be worse than expected, which could open markets to U.S. and EU wheat.
U.S. and European wheat prices fell on Tuesday after the USDA report estimated global supplies above expectations, but analysts remained bullish for EU wheat prices in the long term, expecting diminishing supplies to start forcing European sellers out of the market.
"A lot will now depend on the euro not gaining painful strength and on shipping costs," a German trader said.
Hefty EU wheat exports were buoyed by demand from unusual clients early in the July 2013/June 2014 season.
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