Strategie Grains forecast a “moribund atmosphere” in the EU wheat market extending into next season, thanks to the prospect of a sizeable harvest ahead - yet continued pressure on exports from strong competition with Russia.
The influential analysis group, in its first forecast for the 2018 European Union soft wheat harvest, pegged it at 142.3m tonnes – a drop of only 100,000 tonnes from this year’s result.
Strategie Grains trimmed by 200,000 hectares, to 23.3m hectares, its estimate of soft wheat sowings ahead of the 2018 harvest, taking the figure further behind this season’s 23.6m-hectare figure.
However, the average yield for 2018 was pegged at 6.1 tonnes per hectare, a marginal improvement year on year.
The prospect of another decent harvest – ahead of the 2016 result of 135.6m tonnes, but behind the high of 151.9m tonnes reached in 2015 – comes at a time of diminished export hopes, thanks to strong rivalry on international markets.
Indeed, Strategie Grains lowered by 600,000 tonnes to 22.3m tonnes its forecast for EU soft wheat exports this season, noting that volumes from France, the bloc’s top shipper, face “stiff competition on its main client markets from Russia and Argentina”.
On Wednesday, FranceAgriMer, the official French crop bureau, highlighted rivalry from Argentine and US supplies as it cut its forecast for French soft wheat exports this season.
Paris-based Strategie Grains added that “Polish and German exports are now expected to be very low in comparison to the volumes shipped in recent years, due to the sluggish pace of shipments recorded so far this campaign”.
For 2018-19 too, there appeared little hope of an easing in export competition, leaving the EU facing further growth in inventories.
“Our first forecasts for 2018-19 suggest that the moribund atmosphere in the EU wheat market should continue because the EU would need to export close to 26m tonnes in order for supply and demand to balance.
“Such an outcome seems very improbable given Russia’s projected exportable surplus in 2018-19 and high availabilities amongst the other main exporters.”
Export forecast comparison
Strategie Grains is notably more downbeat on EU wheat export prospects than other observers, with the European Commission pegging soft wheat shipments in 2017-18 at 27.0m tonnes, plus a further 1.40m tonnes of durum, the hard wheat used to make pasta.
The International Grains Council forecasts EU all-wheat exports of 27.0m tonnes this season, including 2.5m tonnes of durum.
The US Department of Agriculture on Tuesday restated a forecast for EU all-wheat exports this season of 28.5m tonnes.