November 16, 2011
EU wheat stocks to remain tight
EU wheat stocks are to stay tight despite a better harvest and increases imports from the Black Sea, due to rising use by livestock farms and ethanol plants.
Wheat stocks in the top grower of the grain will rise in 2011-12, but only by 500,000 tonnes to 12.13 million tonnes, well below typical levels, USDA attaches from across the region said.
That remains well below the average of the previous decade, of 17.3 million tonnes, despite a strong harvest this year, estimated at 137.5 million tonnes, and the prospect of a 59% jump in imports now Black Sea states have exporting again in earnest, following trade curbs imposed last season following drought.
Indeed, Spain, the bloc's top wheat buyer, saw "higher than expected" imports in the July to September quarter - "which resulted in a wheat stock build-up" - as merchants scrambled to use licences for tariff-free shipments into the EU before their expiry.
However, feed use of wheat is expected to rebound by five million tonnes to 57.5 million tonnes, closer to historical levels, thanks to the increased availability of the grain, and relatively low prices.
And, demand for wheat in ethanol plants will grow despite uncertainty over when the UK's Ensus plant will reopen, after shutting down in June in the face of high wheat prices and strong imports of US ethanol, and with the Vivergo site back by the likes of BP and DuPont yet to open.
"Increased industrial use of wheat in Germany, Benelux and Spain means total food, seed and industrial use is forecast to continue its upward rise," if by a relatively slow 500,000 tonnes, the attaches said.
And this figure is below some other estimates, with FO Licht seeing EU ethanol production rise 11% to five billion litres in calendar 2012, after the EU closed a loophole under which E90, a blend of 90% ethanol and 10% gasoline, could be imported under low duties as an alcohol product rather than a fuel.
With exports also set to remain - relatively - firm, "EU wheat stocks are forecast to remain low", the attaches said.
The briefing added that prospects had improved for winter grains sown for the 2012 harvest, after dry weather which had prompted "challenging conditions" in many countries, notably Bulgaria, Hungary, Romania and the UK.
And it noted some changes in the dynamics of intra-European wheat trade, following a second disappointing harvest in Germany, the region's second-ranked wheat producer, after France.
"Lower German availability is expected to see French wheat being imported into Belgium and the Netherlands, while French exports to Spain, Italy, and Greece are likely to decline due to competition from Bulgaria and Romania."
Separately, customs data showed wheat exports from the UK, the EU's third-ranked producer of the grain, recovering 68% month on month in September to hit 277,315 tonnes.
However, the figure remains well below the 393,402 tonnes reached in September last year. Exports so far in 2010-11 are running 35% behind those a year before.