Wheat Market Seen Facing ‘Bearish Summer’ by InVivo on Black Sea
Wheat faces a “bearish” summer and autumn on increased supply from the Black Sea region and uncertainty about imports, said Francois Luguenot, head of market analysis at French grain cooperative Union InVivo.
“The start of the export campaign risks being really tough for the European Union on competition from the Black Sea,” Luguenot said in an interview today. “There’ll be more to export in the Black Sea and demand will be less dynamic.”
On the import side, questions remain about how much Egypt will buy, while Morocco will delay tenders on bigger domestic production, the analyst said. Iran is an uncertain factor after the country surprised the market by purchasing 600,000 to 800,000 metric tons of wheat in the past two weeks, he said.
EU wheat exports may drop to 18.6 million tons in 2013-14 from 21 million tons in the previous season, while Russia’s shipments may advance to 13.9 million tons from 10.8 million tons, the International Grains Council has forecast.
Russian exporters are already selling cargoes of wheat from the 2013 harvest for July 25 shipping, Luguenot said at an industry conference in London organized by the IGC. InVivo is the largest exporter of French wheat.
“There will really be major Russian pressure,” he said. “We’ll have difficulty exporting at the start of the season.”
Production in the former Soviet Union will jump to 99.9 million tons in 2013 from 77.2 million tons last year, the IGC predicts. Russia’s harvest may climb to 52 million tons from 37.7 million tons.
India is expected to export less wheat in 2013-14 due to a smaller harvest and high domestic prices, Luguenot said.
Egypt, the world’s biggest wheat importer, will be buying “hand to mouth” due to economic difficulties, according to the InVivo analyst. The country is “essential” to Black Sea exporters, and its imports could range anywhere from 8 million tons to 12 million tons, he said.
Morocco, the second-biggest buyer of French wheat outside the EU, may start buying wheat in international markets in December, while normally the country starts buying in October, or as early as September “in a bad year,” Luguenot said.
“Egypt is on a razor’s edge, both politically and economically,” the InVivo analyst said. “Morocco will definitely buy less, and the competition will be a bit tougher between Europe and the Black Sea.”
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