French wheat exports forecast raised but surplus still large

Farm office FranceAgriMer on Thursday raised its forecast of French soft wheat exports outside the European Union this season but a further increase to a record harvest kept the EU’s biggest wheat grower saddled with a hefty surplus. Soft wheat exports to non-EU countries in the 2015/16 July-June crop season would reach 11.5 million tonnes, up from 11 million projected last month and now slightly above the 11.4 million shipped last season, it said.

The upward revision to exports reflected shipments made so far this season, including some rare cargoes to Mexico, but did not show a significant change in the market outlook, FranceAgriMer officials told reporters. Traders say French exports need to accelerate sharply to absorb this year’s production, notably to win sales to top wheat importer Egypt that was expected to turn to Black Sea origins again in an international tender on Thursday.

FranceAgriMer raised its estimate of this year’s soft wheat production by 300,000 tonnes to a new record of 41.0 million tonnes, in line with a farm ministry estimate earlier this week. The office’s supply-and-demand projections showed total supply exceeding demand by 4.8 million tonnes. This was less than the 5 million tonne surplus in its initial 2015/16 outlook last month. But if maintained this would still be the biggest end-of-season stockpile since 2004/05 and without the large-scale public storage system that used to clear surplus stocks before an EU policy reform.

However, in a change of methodology from previous years, FranceAgriMer is not giving ending stocks forecasts for 2015/16, citing fluctuating demand trends during the year. Instead, it divided the surplus between an average annual stock level for the past five years at 2.6 million tonnes, and a separate volume of 2.2 million tonnes of available but unallocated supply that could be absorbed by demand or end up in the final stockpile. The office revised down its forecast of the ongoing grain maize harvest to 13.0 million tonnes from 13.3 million last month, down 27.5 percent compared with last year.

Maize (corn) has been the cereal to suffer most from drought and record temperatures in Europe this summer as the harsh weather came in the midst of its growth cycle, whereas wheat and barley were being harvested. The maize surplus in France was trimmed to 2.3 million tonnes from 2.6 million last month, which left it below the 2.5 million tonnes average of the past five years, it said.

Copyright Reuters, 2015


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