Wheat exports from across the European Union should build on record demand in the early part of the 2013/14 season, benefiting from harvest setbacks and rising demand around the world, traders and analysts said. Brisk imports by the likes of China, Egypt and Brazil have buoyed global wheat demand this season and bolstered flows from major northern hemisphere exporters since their summer harvests.
Slackening competition from Russia and Ukraine, whose export prospects have been clouded by lower harvest quality this year and supply risks for next year after rain-hit sowing, have also given room for EU exports, despite a recent rise in prices. All this has meant EU exports have got off to a quicker start than expected in a market usually more dominated by non-EU Black Sea producers at this time of year. Weekly EU soft wheat export licences on Thursday showed a season's high for the second week in a row and also marked the highest weekly haul in three years. The new week reinforced a record pace, with export licences now averaging 517,000 tonnes a week, which if kept up would give full-year exports of nearly 27 million tonnes, smashing a previous high of about 22 million in 2008/09.
While such a spectacular full-season total is unfeasible given EU wheat supply levels, favourable demand trends could still allow the bloc to test its record high, analysts said. "It's above all about demand," said Paul Gaffet of consultancy ODA. "When you add up EU, Black Sea and US exports we're at very high levels. There is clearly a pick-up in global demand."
Analyst Strategie Grains on Thursday raised its EU wheat export outlook to 22.2 million tonnes. ODA is more cautious, seeing EU exports above 18 million and a maximum potential of 22.5 million, but only if stocks were put under strain and animal feed demand cut, Gaffet said. One of the features of this strong demand is that EU exports have been spread more widely across the 28-member bloc, with brisk demand in countries like Germany and Romania reducing the usual dominance of top EU wheat exporter France.
EU data showed Germany slightly ahead of France, with 2.2 million tonnes of licences cleared so far this season against 2.1 million in its neighbour, while Romania had 1.2 million. Traders and analysts caution that the EU figures are a rough indicator as exporters can book licences in one country for shipping grain from another, but they do suggest an eastward shift in exports this season. High-quality German wheat has been particularly in demand. "We have seen a lot of German shipments to traditional customers like Iran, Saudi Arabia and Sudan," one trader said.
"With high quality supplies from Russia and Ukraine dwindling, we could see more German sales to countries like Iraq and Jordan," he said. Romania has emerged as a strong Black Sea exporter within the EU, making a splash as the top supplier to Egypt's state buyer after selling 900,000 tonnes this season, and other east EU states are also selling well.
"The east EU is the surprise this year. Several of the large trading houses have increased east EU supply origination in the past few years and their efforts are starting to show success," another trader said. France should also enjoy high exports as its larger crop this year coincides with demand both from core clients like Algeria and more unusual destinations like China and Syria. Farm office FranceAgriMer this week raised its export forecast to 11.2 million tonnes from 11.0 million last month, citing a sharp rise in volumes shipped so far, and expectations France would sell to Egypt later in the season.
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