Tuesday, 17 March 2015 20:01
HAMBURG: The euro’s fall against the dollar has brightened prospects for European Union wheat exports but lower crude oil prices may curb Middle East purchasing, market observers said on Tuesday.
“The outlook for EU wheat exports is excellent with Russia and Ukraine imposing export restrictions and the weak euro giving a strong price lead against the United States,” one German trader said.
“But some Middle East importing countries seem to have good stocks while the fall in crude oil prices is cutting their purchasing power.”
The European Union on Thursday granted export licences for 1.59 million tonnes of soft wheat, the second-largest weekly volume ever awarded by the bloc following the record 1.67 million tonnes in February.
The EU has recently made big sales to Egypt, Saudi Arabia, Algeria and non-traditional Asian clients including South Korea.
“We are developing a huge EU export programme and more sales are likely from west EU producers and from the Black Sea,” another trader said. “Shipments are so large in Germany that delays in ship loadings are being experienced.”
“West EU wheat for April shipment is about $ 16-$ 18 a tonne fob cheaper than U.S. Gulf soft red winter wheat, with this price difference EU wheat is finding new customers.”
The euro’s fall has boosted French wheat exports, with a recent shipment made to Mexico, and could help France win more unusual sales to Asia.
Farm office FranceAgriMer on Thursday raised its forecast of French soft wheat shipments outside the EU for the fifth month in a row. It now sees them at 10.4 million tonnes against 8 million in its post-harvest estimate.
“If the euro stays at these low levels, there will always be some demand out there,” said Leopold Michallet, an analyst with French consultant Agritel. “This is giving a second wind to European wheat, even if the market consensus has been that the major importers have covered their needs.”
Traders estimate France could ship around 600,000 tonnes of feed wheat to Asia in 2014/15.
But big exports are needed to cut huge EU stocks, with trade estimates France may still have hefty season ending stocks of 3 to 4 million tonnes despite the surging exports.
Britain’s exports have struggled, partly due to competition from France but British sales are rising to non-EU customers with Algeria importing over 250,000 tonnes.
“We have had a low export pace relative to the size of the crop … It is pointing to a pretty high stock situation at the end of the (marketing) year,” said Home-Grown Cereals Authority analyst Jack Watts.
Copyright Reuters, 2015