France export revision flags wheat trade rivalry
By - Published 12/12/2012

FranceAgriMer highlighted the rising prospects for European wheat exports, which are helping keep US merchants on hold, by putting a rise of 17.4% on the cards in French shipments to importers beyond the EU.

The Paris-based farm office raised by 500,000 tonnes to 10.0m tonnes its estimate for exports from France, the European Union's top wheat producer and shipper, to countries outside the bloc.

The upgrade implies a year-on-year rise of nearly 1.5m tonnes in non-EU exports of wheat from France, the region's top producer and exporter of the grain.

And it comes at a sensitive time for the world wheat trade, with the disappointing level of exports from the US, which has been expected to pick up import orders as European and former Soviet Union supplies wane, behind a fall in Chicago prices to five-month lows.

Export rivalry

Indeed, the Agrimer data come the day after the US Department of Agriculture cut its forecast for US wheat exports in 2012-13 by 50m bushels (1.4m tonnes) to 1.05bn bushels (28.6m tonnes).

The downgrade, in the much-watched monthly Wasde crop report, cited "the slow pace of US sales and shipments to date and higher expected competition from foreign supplies".

Brazil, on America's doorstep, has been revealed as turning, unusually, to Germany for wheat imports.

Indeed, the Wasde also raised estimates for European Union wheat exports by 500,000 tonnes, besides those from Australia and Canada.

The cut to US export hopes, reflected in a higher estimate for US wheat inventories at the close of 2012-13, was blamed for a fall of more than 3% in Chicago wheat futures on Tuesday.

Chicago's March lot fell further to a five-month low of $8.09 a bushel, before regaining some ground to stand at $8.12 a bushel at 13:00 local time (19:00 UK time) a decline of 1.1% on the day.

Less for EU neighbours

The performance contrasts with that of Paris milling wheat, which closed down 0.2% at E262.00 a tonne on Thursday, after losing a relatively modest 1.8% in the last session.

However, the competition for French supplies was highlighted by an Agrimer downgrade of 480,000 tonnes, to 7.7m tonnes, in the estimate of shipments to other EU states despite a need for imports by countries including the neighbouring UK.

The UK, usually a wheat exporter, is widely expected to import more than 2m tonnes of the grain in 2012-13, following the worst harvest in a generation at a time when demand is being spurred by increased bioethanol manufacture.

Agrimer kept at just under 2.0m tonnes its forecast for French wheat stocks at the close of 2012-13, representing a stocks-to-use ratio of a thin 5.9%, down from 7.0% last season and 8.4% at the end of 2010-11.

Purchases from Argentina? 

The cut in supplies of French wheat for export elsewhere in the EU also reflected a feed dynamic, with the bloc expected to import hefty amounts of corn in 2012-13, and with, In Argentina, rains during the ongoing harvest expected to increase amounts of wheat downgraded to feed.

"Argentina will have more feed wheat than expected and that is going to be reflected in higher imports into the EU as part of the reduced-tariff quotas," Xavier Rousselin, the head of FranceAgriMer's crop unit, said.

The comments come amid continued speculation that Argentina has lowered to 4.5m tonnes, from 6m tonnes, its wheat export quota because of disappointing harvest results.

© Agrimoney 2017