Fall in euro supports EU wheat exports
Sluggish European wheat exports have found some relief in a fall in both the euro and grain prices, but this may not be adequate to wrest business from Black Sea competitors, according to traders.
The drop in the euro has given a potential edge to European wheat shipments, especially versus relatively expensive US grain. The volume of weekly export licences issued by the EU for soft wheat has accelerated this month, even if they are still far behind last year's record levels.
The fall in the euro is a good thing but this benefit still needs to be turned into new deals, one French trader said. Among the current spate of tenders, European traders were most optimistic about securing business with Saudi Arabia, which bought 440,000 tonnes of wheat of non-disclosed origin.
The weaker euro will make EU wheat more competitive in tenders that involve higher quality demands, a German trader said, citing buyers like Saudi Arabia. Benchmark wheat prices in Chicago remain uncompetitive in major export markets, especially given higher costs for shipping from North America.
Meanwhile, gains for European exports could be modest as Black Sea origins are expected to keep up their brisk shipments, reinforced by the emergence of Kazakhstan as a major supplier, plus a series of export sales by Turkey.
In its latest tender on January 13, Egyptian state buyer GASC bought 180,000 tonnes of Russian and Kazakh wheat, while privately owned Egyptian importer Venus International said it planned to buy about one million tonnes of Kazakh wheat in the year starting in March.