February 15, 2007

EU wheat supply-demand well balanced despite export woes
 

EU 2006/07 wheat supply and demand remain closely balanced as solid internal demand offsets a lack of competitiveness on the global export market, the monthly analytical report Strategie Grains said Thursday.

Strategie Grains said although competing US soft red winter wheat has fallen sharply over the past month, prices are still US$20/tonne (free-on-board) lower than French wheat. Russian wheat is also US$4/tonne less than French, it added.

However this has been compensated by a rise in internal consumption, Strategie Grains said.

"EU wheat supply and demand are now in balance," said the report.

Strategie Grains said the balanced supply and demand will keep price moves limited, but potential to move higher exists should the 2007 harvest outlook deteriorate sharply.

And if world wheat price rises again, "then EU prices will have to follow suit," Strategie Grains said, adding that the situation on the world market in 2007/08 seems likely to remain precarious.

Strategie Grains said even with an expected rise in world wheat output in 2007/08, there would still not be much room for increased consumption.

"This should prevent a significant decline in world wheat prices," the report added.