January 22, 2008

EU wheat competitive for exports but strong euro can block new sales

The EU wheat was considered competitive enough for exports, yet the strength of the euro against the dollar could impede new sales, said Germany's leading grains trading house, Toepfer, on Monday.

Toepfer International said that the EU wheat is again moving into focus for third country exports as, following the increase in Russian export taxes to 40 percent, the EU is the cheapest origin along with Kazakhstan.

The connection between the euro and US dollar has been cited as a very important determining factor in EUs wheat market. The weak dollar against the euro, compounded by high shipping costs, can greatly restrict EU exports.

Both Russia and Ukraine, major rivals to the EU in global grain markets, have recently imposed export restrictions on wheat to sustain domestic need.

German government estimates of grain plantings for the 2008 crop issued on January 14 indicate a significantly larger crop in the country, Toepfer said.

Toepfer forecasts Germany's summer 2008 wheat crop at between 23 to 24 million tonnes, up from 20.9 million tonnes last year.

Meanwhile, rapeseed is seen little changed at 5.2 to 5.3 million tonnes from 5.31 million tonnes.