Strategie Grains cut further its forecast for European Union wheat exports this season, citing strong competition from Russia - but forecast some recovery in 2018-19, despite expectations of a small drop in output.
The influential analysis group lowered by a further 750,000 tonnes to a five-year low of 21.6m tonnes its estimate for soft wheat exports from the bloc, the world’s largest producer of the grain.
The downgrade - which took the forecast 2.5m tonnes below last season’s total, on Strategie Grains estimates – left Strategie Grains notably more downbeat than other commentators, with the European Commission, for instance, pegging 2017-18 shipments at 26.0m tonnes.
The International Grains Council forecasts the figure at 24.9m tonnes.
Strategie Grains highlighted the dent to EU export prospects from Russia, whose shipments have received a boost not just from a record harvest last year, but a mild winter so far too, meaning less logistical hiccups.
Russia’s farmers also have a relatively low cost of production, pegged by analysis group SovEcon potentially at roughly $80 a tonne, enabling the country to offer its huge wheat supplies for export at competitive prices.
‘Breaking one record after another’
"Russia continues to dominate global wheat export trade – with shipments way in excess of all competitors, especially the EU, and breaking one record after another," the Paris-based group said.
Earlier this week, Russia’s farm ministry raised its forecast for overall 2017-18 grain shipments, the majority of which are wheat, by 2m tonnes to 47m tonnes.
And SovEcon signalled an upgrade ahead to its estimate, saying that “our December forecast of 46.6m tonnes of grain, including 35.5m tonnes of wheat, looks somewhat low”.
As of December 27, Russia had exported 20.7m tonnes of wheat since 2017-18 began in July, a rise of 34% year on year, customs data show.
The country has won business from countries including Egypt, the top wheat importer, whose Gasc grain authority this week ordered a further 295,000 tonnes of Russian wheat – taking above 4.0m tonnes purchases from that origin this season, out of a total of 5.04m tonnes bought.
However, Strategie Grains saw some scope for recovery in EU soft wheat export 2018-19, even as it trimmed by 700,000 tonnes to 141.6m tonnes its forecast for the bloc’s harvest this year, thanks to smaller ideas of area in France and Germany, the bloc’s top growers.
“Even with Russian exports hitting a potential new record, the scale of world demand as forecast today is such that most availability in the world’s other main exporting countries will need to be mobilised,” the group said.
EU soft wheat export next season were forecast rising by 2.8m tonnes to 24.4m tonnes.
The forecast factors in an assessment that France will regain some market share in North Africa lost this season to Russia, and to Argentina, which has also regained prominence in international trade.
Indeed, French exports next season were seen rising to 9.9m tonnes, from the 8.8m tonnes Strategie Grains forecast for 2017-18.
The current season estimate is below the 9.3m-tonne figure which FranceAgriMer issued last week for French soft wheat shipments outside the EU.
However, many observers raised the need for a downgrade, with Agritel, for instance, terming the figure “optimistic”, given the pace of shipments so far in 2017-18.
French soft wheat exports outside the EU for the first five months of 2017-18, to November, reached 2.76m tonnes, according to official data, up 34% on last season’s figure, which was depressed by a weather-hit harvest.