December 14, 2007

EU wheat exports to rise in 2007-08

European Union wheat exports need to rise in the second half of the 2007-08 marketing year to balance global supplies, an analytical report from Strategie Grains said on Thursday (December 13, 2007).

The rise in the export pace at the end of the winter will be bullish for EU prices, said Strategie Grain. This bullish phase would likely be triggered by a tightening of US supplies.

Currently EU wheat exports are hampered by a lack of competitiveness compared with Russian and Argentine origin wheat.

EU wheat is currently priced at more than US$60 a  tonne over Argentine wheat, said Strategie Grain. However, EU wheat in now about US$14 a tonne above US wheat, which for nearby destinations is offset by the EU's freight advantage.

Officially EU data show soft wheat export licenses tallied 3.0 million tonnes as of Dec. 4 or 23 weeks into the 2007-08 campaign. This is down from 5.3 million for the same time last season.

But Strategie Grain forecasts EU soft wheat exports will tally 7.6 million tonnes in 2007-08. This factors in a pick up in EU exports in February-March, the report added.

Still the report warned pressure from Argentine wheat exports would weigh on the market short-term.