In the first four months of this year, grains exports from the port of Rouen in northern France, the largest grains export terminal in the country, are well behind last year’s pace. Total exports (mainly wheat together with small volumes of barley and corn) came to 1.99 million tonnes as opposed to 2.81 million tonnes in the first four months of 2011 – a 29% drop y-o-y. Of course the wheat currently being exported is from last year’s harvest (which takes place from July to August), but the relatively disappointing volumes are unlikely to be as a result of constrained supply. Indeed the USDA has estimated that EU-27 wheat stocks (mainly French) in the marketing year ending this June will be around 2.5mn t higher than in 2010/11. Instead the main factor is softer demand for French wheat. Since Russia’s grains export ban ended last summer, not only has France now had extra competition in its export markets, but it has also struggled to compete on price. Current FOB prices for Rouen wheat are around $18/t higher than wheat from Novorossiysk. Are there are signs that things may improve? Algeria, the largest importer of French wheat, is reporting a promising upcoming domestic wheat harvest which is not a good sign for the 2012/13 MY. However, French exporters may find some hope in the fact that the upcoming Moroccan wheat harvest is sharply down from last year as a result of poor weather, with the head of Morocco’s agriculture industry group estimating that wheat imports could rise by 50% relative to the current MY.
Source: ICAP Shipping