November 26, 2008

EU wheat exports have surpassed total 2007-08 exports less than half way through the 2008-09 marketing year, boosted by low freight rates, currencies and a large crop.

Twenty-one weeks into the 2008-09 marketing year, soft wheat export licenses total 9.6 million tonnes, compared with 2007-08 total soft wheat exports of 9.4 million tonnes.

"This is a higher level than normal... it could be a record year," said a France-based trader.

Falling freight rates and a weakening UK pound and euro have made European wheat more competitive on the international market, particularly against major exporter the US, where the dollar has strengthened.

However, Russian and Black Sea wheat remains cheaper than EU wheat, and crops being harvested in Australia and Argentina will provide tough competition going forward, said brokers.

Earlier this week, US pig producer Murphy-Brown, a unit of Smithfield Foods Inc. (SFD), said it plans to import wheat from the UK and Brazil for animal feed.

Last week, agribusiness Frontier, owned by ABF Holdings and Cargill Inc., loaded 45,000 tonnes of feed wheat sold by Bunge Ltd (BG) onto a ship at Southampton destined for the US, according to UK traders. Another ship carrying similar tonnage is expected to depart the port for the US later this week, said traders.