Strategie Grains sounded an optimistic note on European Union wheat prices, even as it raised its harvest forecast, while lifting, again, its forecast for the bloc’s shipments of the grain.
The influential analysis group raised by 1.0m tonnes to 145.5m tonnes its forecast for this year’s EU soft wheat harvest, the world’s biggest, taking it 18.4m tonnes above last year’s dryness-depressed crop.
However, it lifted its export forecast by a more generous 1.6m tonnes to 27.3m tonnes, a four-year high, following a strong start to 2019-20 for shipments.
The revisions fed through into a 300,000-tonne downgrade, to 13.0m tonnes, in the forecast for EU soft wheat stocks at the close of the season, which ends in June next year.
“Given these circumstances, there is nothing to prevent European wheat prices from following the upwards price trend on the world market,” Strategie Grains said.
The comments came even as Paris soft wheat futures for December touched a three-month high of E181.75 a tonne, before easing back to settle at E181.25 a tonne, up 0.7% on the day.
The gain came despite firmness in the euro, which rose by 0.5% against the dollar, after UK and EU negotiators agreed a Brexit deal.
Sentiment has been helped by competitiveness of French wheat export values, as suggested by offers to Wednesday’s tender by Egypt’s Gasc grain authority.
A French cargo pitched by Glencore at $210.86 a tonne was the cheapest offered to Gasc, undercutting Russian and Ukrainian offers, and indeed was snapped up by the authority, despite the extra $4 a tonne or so to ship wheat to Egypt from France rather than the Black Sea.
Egyptian orders, and expectations of increased demand from the likes of Morocco, has helped underpin optimism in prospects for French wheat exports in 2019-20 despite customs data for July and August, the latest statistics available, indicating a slow start to the season.
FranceAgriMer last week raised by 700,000 tonnes to a four-year high of 11.70m tonnes its forecast for French soft wheat shipments outside the EU this season, adding that its estimate is “seen as being at the low end of market expectations”.
European Union soft wheat exports as a whole have, as of this week, hit 7.46m tonnes – up 48% year on year, European Commission data show.
Romania is the top origin, at 2.16m tonnes, after a rapid start although France, which has a far biggest exportable surplus, us now catching up, on 2.05m tonnes.
The top destination is Algeria, at 1.38m tonnes, although this remains down 28% year on year.
Shipments to Saudi Arabia, by contrast - which launched its own 595,000-tonne wheat tender on Thursday – are up 19.6% at 983.064 tonnes.
Strategie Grains’ increased forecast for EU soft wheat exports this season represents a third successive monthly upgrade, with the analysis group foreseeing a 21.9m tonne figure in July, when the marketing year started.
Besides the increased production figure, the analysis group also attributed its upgrade to a logistical squeeze in Russia, the top wheat exporting country, and a key rival to EU shippers.
Russian wheat exports for 2019-20, up to last week, reached 12.9m tonnes according to SovEcon, an 11% fall year on year.
Prospects for 2020
Strategie Grains also released an initial estimate on EU soft wheat area for the 2020 harvest - seeing it little changed on that for the latest harvest, which totalled 23.8m hectares.
Barley is expected to lose popularity, in the face of relatively soft prices, with winter crop area seen falling 3% year on year, and spring barley by 4%.
However, maize will pick up sowings, with area seen growing by 2%.