May 18, 2006

 

EU expected to increase wheat exports by 2 million tonnes this year

 

Strategie Grains estimated 2006-07 European Union wheat exports at 13.8 million tonnes, up 2 million tonnes on-year in its monthly analytical report released Thursday (May 18).

 

Strategie Grains this month showed an upward revision in EU 2005-06 wheat exports and consumption, which prompted a one-million-tonne reduction in projected closing stock compared to last month.

 

"The EU is now showing a surplus of just 800,000 tonnes," said the report. "Supply and demand in Germany, France and the UK are balanced and are virtually balanced in Hungary, Czech Republic and Slovakia."

 

Despite this increase in exports, the EU balance still has a potential small surplus, according to the report.

 

Strategie Grains said the surplus quantities would be located in Germany, Hungary and the northern EU countries, while a more balance scenario was expected for France and the UK

 

Slow plant growth and higher world prices have supported new crop wheat prices in the last month, but the rise has been less than old crop prices, which have been supported by tightening availability.

 

World wheat stocks are set to decline in 2006-07 to just 20 percent of annual world consumption, said Strategie Grains. The report added that a potentially explosive situation could develop in the world market, "if there are further downward revisions for the US harvest or if production falls short of current estimates in other important exporting countries."

 

EU's cereal production for 2006-2007 is estimated at 264.9 million tonnes, down 2 million tonnes from its April estimates but up 3 percent from last season's crop.

 

The largest reduction was in soft wheat. Strategie Grains now lists EU soft wheat output at 118.8 million tonnes, which is down 1.5 million tonnes from the April estimate, but up 3 percent from the 2005-06 crop.

 

"In central Europe, wheat yields have been revised down to take account of the impact of excess water levels in the soil caused by melting snows and high precipitation levels this spring," the report said. 

 

Strategie Grains also trimmed forecasts for soft wheat yields in France and the UK, due to some shortages of water, but added that recent rains have prevented more severe damage.

 

EU corn output was forecast at 49.6 million tonnes, down 200,000 tonnes from the April figure, and unchanged the 2005-06 harvest.

 

Most of the reduction stemmed from a cut to French corn area, the report said.

 

Corn planting is currently underway across Europe, but is now mostly finished in Italy and Spain, about 75 percent done in Hungary, and around 75 percent complete in Germany and France, Strategie Grains said.