French and U.S. wheat exports have both soared since lastmonth after Russia's withdrawal from the world market andbecause of a lack of bread-quality wheat from a rain-blightedharvest in Germany.
"The French wheat balance this year is based on the ideathat there is room (on the world market) for 15 million tonnesof French wheat," Xavier Rousselin, head of FranceAgriMer'sgrains division, told Reuters in an interview prior to thepublication of the office's 2010/11 forecasts.
FranceAgriMer's estimate for 11 million tonnes of wheatexports outside the 27-member bloc, compared with a previousrecord of almost 10 million tonnes last season, data released onWednesday showed.
The worst drought in a century in Russia is expected toslash grain output by about a third year-on-year in what was theworld's No. 3 exporter and has prompted the country to suspendexports from mid-August. Russian authorities now expect the banto run until late 2011.
(For a factbox on the weather impact on major producers'crops:)
The main state grain buyer in Egypt, the world's top wheatimporter, has bought 780,000 tonnes of French wheat, but noGerman wheat, since Russia announced the ban.
Rousselin said France, by far the EU's top wheat producer,could ship even more to meet demand for business lost by Russiaand Germany, its main European competitor.
To sustain this surge in exports amid a fall in French wheatproduction this year, France should import its highest volume ofwheat in more than 60 years, the office said, pegging 2010/2011imports at 1.2 million tonnes, up from 491,000 in 2009/10.
"We have never seen such high (import) levels since thecreation of the Common Agricultural Policy," Michel Ferret, headof markets at FranceAgriMer, said in reference to the EU'ssingle farm policy.
Industrial users such as animal-feed makers and biofuelproducers are expected turn to cheaper feed-grade wheat fromother EU countries, while pricier French milling-quality wheatgoes abroad.
EXPORTS WITHIN EU TO FALL
Rousselin stressed there was a margin for a rise in Frenchwheat shipments outside the EU beyond 11 million tonnes giventhe scope for its exportable surplus to be boosted by a drop inon-farm use, a further rise in imports or a downward revision toending stocks.
"Everything that can be exported will be exported," he said.
FranceAgriMer expects stocks at the end of 2010/11 to be 2.2million tonnes, a third lower than an upwardly revised estimateof 3.4 million for last season.
"This is a reasonable stock level," Rousselin said. "It isnot at all heavy, but it's not yet in the red."
In Russia's main export zone of the southern Caucasus, theMiddle East and North Africa, European wheat is the most viablealternative, and France the best placed to fill gaps, he said.
"Tension in the market is being channelled towards Francebecause it is the nearest and cheapest export supply," he said.
Russia's embargo and a slowdown in shipments from Ukrainecould bring unusual business for French wheat in Middle Easterncountries such as Jordan, Lebanon, Oman and even Iraq, he added.
Despite a steep rise in the price of French wheat, itretained a cost advantage in the Middle East over more abundantbut more distant U.S. wheat as freight costs rise, he said.
Total French wheat sales abroad in 2010/11 are not forecastto match past record levels, because exports within the EU willdecline in view of the focus on supplying the world market andbecause France lacks competitive feed wheat.
Spain, a major importer of feed grain, is expected to buyless wheat from France.
French wheat exports within the 27-member EU are estimatedto reach 6.8 million tonnes, down from 7.3 million in 2009/10,bringing overall projected exports to almost 18 million.
"France will export more milling wheat and less feed wheat,"Rousselin said.
Source: Reuters
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