EU wheat exports slacken as importers juggle with Russian supply
- Brisk sales of EU wheat earlier in the July-June season, including large volumes of French wheat for China and German wheat for Algeria, had fuelled talk of tight stocks after a smaller harvest last summer.
- Russia's decision to tax wheat exports from mid-February, to help cool local prices, was then expected to bring further demand for EU wheat, but prospects have instead dimmed.
HAMBURG/PARIS: European Union wheat exports are set to tail off at the end of this season as Russia continues to ship supplies despite export levies while importers hold out for cheaper new-crop grain this summer, traders and analysts said.
Brisk sales of EU wheat earlier in the July-June season, including large volumes of French wheat for China and German wheat for Algeria, had fuelled talk of tight stocks after a smaller harvest last summer.
Russia's decision to tax wheat exports from mid-February, to help cool local prices, was then expected to bring further demand for EU wheat, but prospects have instead dimmed.
"There was very heavy buying by the importers in advance of the Russian export taxes in February and March which smothered a lot of expected import requirements," a German trader said.
"Now the importers are awaiting the new crop in Russia, which started in late June in 2020 in the early regions so you are only talking about 12 weeks before the first supplies can arrive."
Egypt, the world's largest wheat importer, this week booked Russian and Ukrainian wheat in a tender for August shipment, skipping the final delivery months of this season.
Short-term prospects for EU wheat have also been dented by a smaller than usual volume purchased by Saudi Arabia this week, and a drying up of French sales to China in the face of Australian competition.
After a pullback in prices from multi-year highs, importers are expected to continue biding their time, particularly after Egypt's tender showed large offers of new-crop Russian wheat despite uncertainty over a variable export tax planned by Moscow from June.
EU exports should still be sizeable in relation to its smaller 2020/21 surplus, helped by steady demand from Algeria and Morocco.
End of season demand for wheat could also shift towards the domestic EU market.
Soaring corn prices, which are unusually at a premium to wheat in Europe, are expected to lead to more use of wheat in livestock feed.
"The wheat that's not exported may find some demand from the pig industry," Benjamin Bodart of consultancy Agritel said.
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