European wheat exports are accelerating as export curbs in key producers, a shrinking US surplus and strong global demand bring the world's major importers to its door, analysts and traders say. "Europe is where the wheat is and...is where buyers will turn," a European trader said. "What other origins are left?" asked another.
But the window of opportunity is narrow because new crops in importing countries and other parts of the world will be harvested soon. Cheaper new crop wheat prices mean buyers could refrain from covering their longer-term needs, they added.
European wheat exports have run far behind schedule during most of the season, with only 4.5 million tonnes exported by the end of February, nearly two million tonnes less than at the same time last season.
Part of the gap was due to a lower harvest in 2007 than the year before but the main problem was poor quality that did not meet the high milling criteria imposed by many large importers.
But market sources stress international wheat buyers will have to shop on the European market with the US surplus nearly sold out, a devastated Australian crop and exports restrictions in Russia, Ukraine, Argentina and possibly Kazakhstan. Wheat, the world's most-exported grain, has hit record highs in recent weeks as it became clearer that already thin supplies would be reduced by new export restrictions.
Ukraine had started closing its doors on exports in June when it set prohibitive quotas to protect its supplies, which made grain shipments fall to 300,000 tonnes in the first seven months of the 2007/08 season from about 5 million in the same period in 2006/07, UkrAgroConsult said last month.
Russia also has taken measures to protect its market, setting a 40 percent tariff on wheat early January that blocked shipments from its ports. Moscow signalled on Thursday its intention to extend the tariff until July 1.
Argentina last week delayed the reopening of its wheat export registry until April 8, from the previous target date of March 17, to continue safeguarding domestic supplies.
Last but not least, Kazakhstan, which has become a key wheat exporter on international markets, said in late February that it also mulled a customs tariff to curb grain exports. "European wheat can now profit from the absence of Black Sea wheat from the market," French analyst Strategie Grains said last month, putting the EU's 2007/08 wheat exports at 7.5 million tonnes.
The drying-up of supply origins forced some importing countries, which have strong immediate needs, to ease their import systems, a move seen benefiting EU wheat. "There have been larger exports in February, with French wheat exports moving up from around 100,000 tonnes a week to 150,000 now," Geneva-based analyst James Dunsterville said.
Egypt, one of the world's leading wheat importers, amended some quality criteria last week to include more origins. The next day Cairo was buying 120,000 tonnes of French wheat for the first time this season.
Other North African importers, which account for about 15 percent of world wheat trade and form the EU's top export market, also widened their doors to imports. Morocco, a large buyer of EU wheat, started subsidising imports, Tunisia bought more than 115,000 tonnes optional wheat since mid-February and shipments to Algeria have picked up.
Reuters' monitoring of French ports - one of the main origins of EU grain exports - showed that there were ships in line or awaited to load 110,000 tonnes of wheat for Algeria and more than 41,000 tonnes for Morocco by March 12.
However, analysts stressed buyers may limit their demand as much as possible until their own harvest starts in a few months and new EU crop prices ease at the end of the July/June season. The spread between old crop (April) and new crop (July) prices in Europe is currently at a rare 45 euros ($69) a tonne, against 20 euros usually. "If I was a buyer I would be buying as little as possible," Dunsterville said.
Comments
Comments are closed.