Strategie Grains raises EU wheat export forecast, cuts harvest outlook
Strategie Grains raised its forecast for European Union soft wheat exports in 2019/20 on Thursday, citing strong demand and lower competition, and cut its end of season stock estimate.
The French-based consultancy’s monthly report forecasts EU soft wheat exports of 34.3 million tonnes, an increase from the 32.4 million tonnes it predicted in April.
“The small volume of residual wheat availability in the Black Sea countries; large-scale strategic purchases on the part of several countries in the Middle East, and more buying activity by Morocco,” were all factors, Strategie Grains said.
Wheat has become more scarce in the Black Sea region since Russia, the world’s largest exporter, and Ukraine placed quotas on exports in response to the coronavirus crisis.
And Morocco last week extended its suspension of import duties on soft wheat to December 31, to ensure price stability and regular supply amid low domestic harvest.
Strategie Grains said strong demand had led it to cut its estimate for stocks at the end of the season on June 30 to 12.6 million tonnes, from 13.7 million seen last month.
In its latest report the consultancy said it had re-examined the impact of the coronavirus crisis and although there were only minor changes to milling and starch demand, the impact was greater than expected for the ethanol sector.
Ethanol production in the European Union, and demand for the grain used to make it, has collapsed with fuel demand due to the coronavirus crisis. The sector could now suffer increasingly competitive Brazilian and U.S. ethanol imports.
“These consequences of the coronavirus crisis are all bearing down on previously envisaged demand levels but in recent weeks, their influence has in part been countered by the dynamism of EU wheat exports,” Strategie Grains said.
The extension of restrictions on restaurants, bars and hotels, which has severely cut beer demand, also prompted Strategie Grains to lower its forecast for malt and malting barley use in the bloc both this season and next.
For next season, Strategie Grains cut its forecast for the 2020 soft wheat harvest to 132.9 million tonnes, from 135.0 last month and now 13.6 million tonnes below last year’s hefty harvest after adverse weather.
It also reduced its forecast for maize output next season, to 65.9 million tonnes from 67.3 million, while it increased the barley on to 62.6 million tonnes from 62.3 million.
Strategie Grains is continuing to include Britain in its EU estimates despite its exit from the bloc at the end of January.
Source: Reuters (Reporting by Sybille de La Hamaide; Editing by Jason Neely and Alexander Smith)