The balance among wheat exporters to pick up trade left by the ban on Russian shipments is tipping in North America's favour, US officials have said, highlighting the damage wrought by rain to the quality of Germany's harvest.

The US Department of Agriculture, in a benchmark report, slashed 3.0m tonnes from its estimate for European Union wheat exports in 2010-11, leaving them at 21.0m tonnes, in line with those a year before.

The downgrade represented in part weaker production hopes, with "heavy summer rains" cutting yields in particular in Hungary and Romania.

"During August, between 4 and 10 inches of rain fell across central Europe during the wheat harvest, disrupting progress and lowering both yield and quality," the USDA said.

'Strong early sales' 

Quality had deteriorated most notably in Germany, a major provider of high-grade milling wheat, but which had suffered "persistent and heavy August rains".

Indeed, Europe faced "increased competition" from Canada, another supplier of high grade grain, whose prospects were boosted both by improved crop expectations and hefty inventories left over from last season.

The report also highlighted "higher expected demand" for US wheat, for which export hopes were raised by 1.3m tonnes following "strong early-season sales".

Indeed, separate data showed US wheat sales enjoying their best week in three years, with sales topping 1.2m tonnes in the period ending September 2. Egypt, the world's biggest wheat importer, was the top buyer, taking nearly 450,000 tonnes.

'Slightly bearish'

With expectations for Europe's own wheat consumption also lowered, the revisions fed through into a 3.3m-tonne jump, to 13.4m tonnes, in the estimate for the region's wheat stocks at the close of 2010-11.

However, the data met with a muted response among investors in Europe, which itself enjoyed its best week for exports in three years, according to data revealed late on Thursday.

The European Commission said that it granted licences for exports of 943,000 tonnes of soft wheat, mainly from France, which has enjoyed a string of victories in export tenders.

Paris milling wheat for November closed 1.2% higher at E230.50 a tonne.

London feed wheat for November ended up 1.2% at £161.00 a tonne.

'Slightly bearish'

Indeed, Chicago contracts were the worst performers, spending most of the day in negative territory before a late recovery to close up 0.4% at $7.36 ¾ a bushel for December delivery.

Traders blamed the modest performance on the USDA's upward revision of 3.0m tonnes in its estimate for world inventories at the end of 2010-11.

The revision reflected richer stocks coming into the year than had been thought.