European Union 2010-11 soft wheat production rose slightly to 127.9 million tons to reflect higher output from Poland, Germany and the U.K. and small cuts to southeastern EU and Baltic harvests, Strategie Grains said.
The company estimates EU soft wheat output will be 700,000 tons higher than its September estimate and down 0.9% compared with 129.1 million tons from last year.
The French forecaster says the outlook for EU wheat "remains very tight with high export demand," potential even though the U.S. remains the most competitive source for wheat given its ample wheat stocks that can be used to make up for the shortfall in Russian and Ukrainian wheat exports.
Strategie Grains expects the EU will export 18 million tons of wheat in 2010-11, up slightly from its September estimate of 17.4 million tons. The U.K. will export at a "very high level" of almost 2 million tons because it remains price competitive relative to France and southeast EU wheat origins, the firm said.
The U.K. export figure stands in contrast to the Home Grown Cereals Authority expectations for a 46% drop in U.K. wheat exports to 1.3 million tons in 2010-11.
2010-11 Intra-EU exports remained unchanged compared with the September estimate since an upward revision to Polish, Lithuanian and Denmark exports were offset by lower export expectations from the Czech Republic, France and Germany.
From a global perspective, wheat ending stocks are now forecast at a more comfortable 166 million tons, partly due to ample U.S. wheat stocks even though a severe drought in the Ukraine and Russia has crimped exports from those two countries.
Within the EU, the story is a bit different. "The supply situation remains very tight with soft wheat ending stock estimated at just 9 million tons" and no feed wheat surplus to spare, the French forecaster said.
"This situation indicates that [EU] prices will stay sustained until at least Christmas and that the decrease potential after then will be small," it added.
EU wheat prices will hinge on how tight corn supplies remain, changes to U.S. wheat prices, and 2011 world wheat production.
Strategie Grains expects 2011-12 EU planting area for soft wheat and barley to rise 3% on the year and corn to grow 4%.
Strategie Grains Thursday also revised its total grains forecast up by 1 million tons to 275.9 million tons due to a rise in barley and wheat output estimates, which largely offset a cut to maize output estimates.
"The maize harvest is progressing normally in west Europe and the southeast, but has been delayed by rains in central Europe," prompting the firm to reduce its maize output estimate downward by 400,000 tons to 55.6 million tons compared with the September estimate.
Dow Jones Newswire
Dow Jones Newswire