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Rain damage costs EU top spot in wheat exports

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The European Union has, six weeks into the wheat marketing year, lost its hope of taking top rank in world exports of the grain for the first time, thanks to the harvest-time rains which have rendered much of its crop fit only for feed.

The US Department of Agriculture slashed by 3.0m tonnes to 25.0m tonnes its forecast for European Union wheat exports in 2014-15, which started last month, citing "lower quality" grain.

"Excessive harvest-time precipitation in several European production regions has increased the quantity of feed quality wheat," which was seen as being mainly consumed within the bloc, rather than exported.

The estimate for EU use of wheat in feed was hiked by 2.5m tonnes

The revisions left the EU, typically an abundant source of milling wheat, largely from France, back behind the US in the world export league, if by a modest 170,000 tonnes.

The EU has not in any of its guises overtaken the US on wheat exports (outside the bloc) on records going back to 1960, and fails to do so even when combined volume totals of the current list of 28 countries is used.

'Localised quality problems'

The USDA downgrade came hours after France, the EU's top wheat producer and exporter, raised its estimate for its soft wheat harvest by 800,000 tonnes to 37.3m tonnes, but warned over "variable" quality thanks to harvest time rains.

While "frequent and abundant" rains last month had boosted growth of corn, which as an autumn-harvested crop is still in its growth phase, they had "penalised" wheat, with moisture encouraging the sprouting of ripe kernels, reducing milling characteristics.,

The conditions, accompanied by cooler weather, "has produced localised quality problems, particularly in the Paris Basin and the east of France", the French farm ministry said.

Some quality problems had been reported, "particularly cases of sprouting, which leave Hagberg falling numbers," a key milling specification, "below levels usually required", the ministry said, if adding that it had no estimate yet for the amount of grain affected.

'The real problem'

Estimates in the trade indicate that about only one-third of French wheat will show the Hagberg number of 225 seconds required by the country's usual export markets in North Africa, with perhaps half of the crop below the 180 seconds required for any milling uses.

French export prospects have been further clouded by specifications for delivery against Paris futures which - while standardised last week, easing some confusion – have been set at levels below those required by many exporters.

On Hagberg numbers, for instance, the specifications show a base of 220 seconds, but a tolerance of levels down to 170 seconds, with minimum protein at 10.5% and maximum moisture of 15%.

"This is the real problem - when shippers are selling export cargoes at 225 Hagberg minimum, they do not want bits of 170 Hagberg in the bulk," traders at a major European commodities house said.

"However, the futures store operators do not want to restrict deliveries to the silos. Essentially, they are export facilities and therefore throughput is everything."

UK grain merchant Gleadell said that the revised specifications "would rule out North African milling markets", and show "the magnitude of the problem faced by France this season".


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