June 14, 2012


France's wheat stocks outlook up, exports down

For the second straight month, forecast of French soft wheat stocks at the end of this season has been raised on Wednesday (June 13), by farm office FranceAgriMer, while exports outlook was lowered.


The office increased its forecast of soft wheat stocks at the end of the 2011-12 season on June 30 to 2.51 million tonnes against 2.36 million seen last month, although this was still down 14% on ending stocks in 2010-11.


The stock revision mainly reflected a cut in forecast French soft wheat exports outside the EU this season to 8.5 million tonnes, against 8.7 million seen last month. FranceAgriMer had already trimmed last month its outlook for non-EU wheat exports from nine million in April which was its highest estimate for this season.


The latest export forecast was down 34.1% on a record 12.9 million tonnes last season when France, the EU's top wheat grower and exporter, benefited from the absence of rival exporter Russia, which banned grain shipments for almost a year after a severe drought in 2010.


FranceAgriMer's reduced export forecasts in the past two months reflect relatively high prices for French wheat, which has become less competitive against rival exporters like the US and Argentina. But some traders were sceptical about the cut to the export outlook which they said did not reflect actual shipments.


"It's surprising, it doesn't make sense with regards to the shipments," an export trader said, adding he estimated exports at around 8.7 million tonnes including loadings still due before the season closes on June 30.


According to a Reuters calculation based on port data, France has already shipped 8.4 million tonnes of soft wheat outside the EU this season. Further shipments are scheduled in the coming days.


Traders also said French wheat had recovered some competitiveness due to a slide in the euro, while France was further seeing a string of late-season shipments to Algeria, partly due to quality issues with rival Argentine wheat.


For corn, the office cut its estimate of 2011-12 ending stocks to 2.34 million tonnes from 2.42 million in May, putting stocks 2.7% above last season's level. This was mainly due to a rise in forecast exports within the EU to 6.31 million tonnes from 6.1 million last month, leaving the projected volume 18.4% above last season's.


FranceAgriMer maintained its forecast of 400,000 tonnes of exports outside the EU, more than double last season's 153,000. French and other EU countries have seen higher than usual corn exports this season as tight supply in top global producer the US has attracted some demand.