EU wheat outlook 'bearish' despite boom in exports

Strategie Grains underlined ideas of Europe performing strongly in wheat exports next season, but said that the prospect for prices was "rather bearish" nonetheless, undermined by the competitiveness of corn for animal feed.

The influential analysis group lifted its forecast for European Union soft wheat exports in 2014-15 by 1.4m tonnes to 24.3m tonnes - a figure it has now raised by nearly 4m tonnes in four months, and which would be a record high were it not for the strong performance this season.

Indeed, Strategie Grains upgraded its estimate for shipments this season by 1.3m tonnes to an all-time high of 28.1m tonnes, highlighting increased ideas of demand from Africa, and from Iran and Turkey - two countries where drought has hurt prospects for this year's output.

"EU soft wheat exports have partly met this increased demand," the Paris-based group said.

"German exports have increased considerably due to demand from Iran," which US Department of Agriculture analysts believe is on course for a 1.5m-tonne cut to 13.0m tonnes in wheat output this year.

'Lost competitiveness'

However, Strategie Grains nonetheless lifted its forecast for EU soft wheat stocks at the close of 2013-14 by 1m tonnes to 14.7m tonnes.

The upgrade to export hopes was more than offset by a 2.7m-tonne cut to 112.5m tonnes in expectations for feed use, as livestock producers switch to lower-priced grains.

Wheat has "lost competitiveness compared with maize", the group said, raising its forecast for this year's EU corn crop by 700,000 tonnes to 65.9m tonnes, a rise of 1.5m tonnes year on year.

While prospects for world wheat supply and demand in 2014-15 appear "balanced", the EU outlook looks "much more comfortable", the group said, adding that prospects were "overall rather bearish for EU [wheat] prices".

US vs EU

The forecasts follow a forecast by the USDA on Friday that the EU will next season overtake the US in all-wheat exports for the first time to become the world's top shipper.

US exports themselves are being undermined by drought damage to the hard red winter wheat crop, a factor which Strategie Grains said could yet lead it to lift further its estimate for EU shipments if further demand cross the Atlantic.

The group estimated the total EU grains crop this year at 298.8m tonnes, up 900,000 tonnes from its previous estimate but below the 302.0m tonnes achieved last season, reflecting largely weaker expectations for rye production.

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