Adds new price high on Thursday, sowing expectations
PARIS, Nov 18 (Reuters) – Consultancy Strategie Grains sharply cut its demand forecast for European Union wheat in 2021/22 as high prices were seen eroding exports and leading industrial processors to switch to maize.
In a monthly grain report, the consultancy lowered its outlook for EU exports of common wheat, or soft wheat, by 1.6 million tonnes to 30.4 million tonnes.
Along with a cut to projected wheat use in livestock feed in favour of maize (corn) within the EU, this led Strategie Grains to increase its forecast for EU soft wheat stocks at the end of the 2021/22 season next June by more than 2 million tonnes to just over 12 million tonnes.
“The situation is on the point of tipping into heaviness, especially in France, and prices now have a decrease potential going forward,” it said of wheat.
European wheat prices BL2c2 hit a new 14-year high on Thursday as strong international demand fuelled concern about availability in exporting countries. GRA/EU
However, Strategie Grains said the wheat market lacked factors to warrant further price gains, unless current wet weather in Australia caused significant harvest damage or Argentina limited exports.
French prices faced further pressure from a change to Algeria’s import terms that favours Russian supplies, it added.
The competitiveness of maize against wheat and also barley led Strategie Grains to revise up by 1.5 million tonnes its forecast for maize use in EU livestock feed.
Attractive prices and a large EU harvest are also expected to encourage maize to be used heavily in ethanol at a time of favourable margins for the biofuel, it said.
The increased demand prompted the consultancy to raise its outlook for EU maize imports in 2021/22 by 1.1 million tonnes to 15 million tonnes, despite an expected seven-year high for domestic EU maize production at 67.8 million tonnes.
For next year’s harvests, Strategie Grains said it currently expected EU farmers to sow slightly less wheat and maize, but increase slightly the barley area.
TABLE-Strategie Grains estimates for EU-27 cereal cropsID:nL8N2S92NQ
(Reporting by Gus Trompiz; editing by David Evans)
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