Will the Algerian market, which is important for the European grain market, pass into Russian hands? Traders expect that even the cooperation of French grain traders will probably not prevent the European export market from losing this buyer.
This month it was announced that 3 important French cooperatives will work together to sell wheat under the name Grains Overseas. It is a response to the rapidly growing exports from Russia and Ukraine. Important importing countries, such as Egypt and Morocco, are therefore increasingly switching to wheat from the Black Sea region.
Algeria increasingly important
As a result, French exports are continuing to decline. In 2018/2019, 10 million tons of wheat were exported, compared to the 12 million tons or even higher export figures in previous years. Algeria is becoming increasingly important for the sale of French wheat. Algeria sets strict requirements that wheat from the Black Sea region cannot meet.
Traders therefore argue with the news agency Reuters.com that the cooperation of the cooperatives is important to remain competitive on the international grain market. Russia recently announced that it would pump tens of billions into the grain sector. Russia is seeking access to markets such as Algeria and Saudi Arabia, which are very important for European exports.
Compete on price and quality
French cooperation is not considered sufficient. A trader states that; Even if all French traders work together, they must still be able to compete on price and quality with Russian wheat. If Algeria does buy Russian wheat, French (and therefore European) wheat exports will have a major problem. The question then is who buys the French wheat.
Now the fact that Algeria, as a former colony, has a close relationship with France may offer an advantage. However, there is currently political unrest in Algeria. Political changes could pose a risk, with cheaper Russian wheat becoming more interesting than French wheat.