After a poor year of exports, the European Union is doing good business on the world market in the first half of the marketing season. Competitively priced wheat, of good quality and with a favorable euro exchange rate, ensure that Europe is a global player.
At the end of October, the volume of soft wheat exported from the European Union was 8,55 million tons. This is evident from data from the European Union itself. This level is 50% higher than 1 year earlier, which is mainly due to the above matters and the wide availability.
Germany's turn
In addition to France, Germany is also starting to benefit from the positive momentum. French ports are full, which means they are moving to Hamburg, for example. Iran is traditionally a major buyer of German wheat, but hopes are also pinned on Africa.
Another factor is rising wheat prices in Russia. As a result, buyers are more likely to look at alternative suppliers. The FOB (Free On Board) price for 'Black Sea wheat' is $199 per tonne. Arable farmers can afford to wait before selling. They are now in a better financial position and expect prices to rise further. The exported volume of grain is 12% lower than in the same period last year. This concerns 12,9 million tons of wheat.
Russian influences
Egypt is the largest buyer of both Russian and French wheat. State-owned company GASC has been tendering for large volumes of wheat for some time. The import count now stands at 1,8 million wheat of Russian origin and approximately 800.000 tons from Ukraine. France supplied 300.000 tons and Romania 700.000 tons.
The position of United Grain Co. is striking. This company sold 25% of all Russian wheat to Egypt and therefore has a dominant presence on the market. Perhaps not so strange, what the Russian company is financially supported by the Russian government. In addition, it has one of the largest port terminals in the Black Sea region, allowing it to export at a lower price than its competitors.
Falling price
Despite a positive story for exports, the European price of wheat is again under pressure. In week 44, the Matif in Paris fell back below €180 per tonne. On Monday afternoon, November 4, the December contract is listed at €177,25. In the United States, the picture of wheat is more positive and the price is rising. There, grain traders are concerned with the upcoming WASDE report and the corn harvest.
It is important for the European grain trade to keep wheat prices at a level that makes it attractive to do business. This is less positive for the arable farmer. Russian wheat may be more expensive, but freight costs to Africa are lower compared to Europe. This keeps the market subdued.
There is also noticeable pressure on the global market. A good harvest in South America is being looked at with a slanted eye. Recent rainfall in Australia also leaves the situation there literally clear up.