France’s Socomac Closes Wheat Silos as Stocks Pile UpRudy Ruitenberg
Socomac, a grain terminal operator in the French port of Rouen that is a delivery point for Euronext milling wheat futures, closed its silos for new deliveries as grain piles up amid a lack of shipments.
Socomac’s silos are 90 percent full, said Claudine Revolio, a spokeswoman for Groupe Soufflet, which owns the export terminal. Senalia, the biggest silo operator in Rouen and the other delivery point for milling wheat futures, stopped accepting deliveries in September.
French wheat quality deteriorated this year as wet weather damaged part of the crop, with 46 percent of grain of the lowest grade suitable mainly as animal feed, compared with 12 percent in 2013, according to crop office FranceAgriMer.
“This year, there’s little wheat of good quality in the Rouen back country,” said Paul Gaffet, an analyst at Offre & Demande Agricole in Bourges, France. “Exports from Rouen aren’t taking off. As long as we’re not finding a market for these intermediate wheats, it’ll be complicated.”
Socomac suspended accepting wheat due to a lack of prospects for vessel loadings in combination with the level of stockpiles in its silos, Soufflet wrote in an e-mailed statement. That mirrors the reasons cited by Senalia last month.
The suspensions won’t affect the Euronext milling wheat contract, and full silos mean there’s wheat available for delivery against the contract, according to Olivier Raevel, head of commodities at the exchange.
“It’s a mix of both abundance and varied quality, there is a very large amount of tonnage available in every type of quality,” Raevel said by phone. “We’d rather have that the silo be open.”
Euronext has said it’s considering adding quality criteria for the Paris milling wheat contract, which doesn’t stipulate minimum levels for protein or Hagberg number, an indication of baking quality. Senalia and Socomac have set average minimum protein content of at least 10.5 percent for wheat that enters their silos, and a minimum level of Hagberg of 170.
Any new contract specifications wouldn’t apply to the 2014 crop, according to Raevel.
As of Oct. 6, wheat with minimum Hagberg of 220 traded at a premium of 8 euros ($10.14) a metric ton to the Euronext contract, while wheat with minimum Hagberg of 170 traded at a 7-euro discount, according to Gaffet.