The fast pace of West European wheat exports, partly due to Russia's pullout from the market, has emptied UK silos and put France on track for record sales, and the bullish trend should last as operators ration supplies. Euronext wheat prices surged over 75 percent in the past six months as evidence rose that supplies of bread-quality wheat were low.
A lot of the Canadian crop was graded fit only for feed and drought ravaged harvests in Russia, forcing it to halt exports. That sent prices soaring around the world and forced importers to turn to the last two Northern hemisphere grain suppliers, the United States and the European Union, the latter mainly France and Britain. The quality of the German crop had suffered due to rain.
"Overall the world is showing a shortage of quality wheat so we can only be bullish on wheat," Agrinews analyst James Dunsterville said. At the European level, the EU granted more than 10 million tonnes of wheat export licences since the start of the 2010/11 season or some three million tonnes more than at the same stage last season.
Farm office FranceAgriMer this week predicted that French wheat exports outside the European Union will reach a record 11.6 million tonnes in 2010/2011. "We will sweep the silos clean and there is every chance it will find a market," said Remi Haquin, head of FranceAgriMer's specialised grains committee.
Of the objective of 11.6 million tonnes, 6.7 million (60 percent) had already been exported in the first five months of the season, against 3.7 million at the same point last season and the agency predicted that the volume would gain another million by the end of the year.
FranceAgriMer said there was demand in the world market for 13 to 14 million tonnes of French wheat but that volumes available would not be sufficient. "France is not in a position to export 14 million tonnes, so prices rise to ration demand," a French trader said.
The fast pace of French wheat exports, which meant the export target could be hit by April, kept German hopes alive. "Germany is not totally out of the export picture despite our poor crop this summer. We could see more German sales in early 2011 as France sells out. Otherwise the burden of providing export supplies will go to the US, which still has large stocks," a trader said.
German wheat was sold to Bangladesh last month. In Britain, customs data shows that UK wheat exports for the July/September period almost doubled year on year to 854,316 tonnes versus 440,669 tonnes. But after a strong start, UK exports of wheat were set to slow significantly in the New Year as supplies dry out. "There will be minimal wheat loaded out of the UK from January," David Doyle, head of wheat exports for Britain's largest farmer co-operative Openfield said.
Dealers said the strong pace of sales has continued, virtually exhausting Britain's exportable surplus. "The UK exported extremely aggressively from September to December and consequently has been pricing itself to reduce the rate of exports," Doyle said.
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