EU Wheat Exports Expected to Decline Significantly in 2024/25, According to USDA FAS Report
Source: DairyNews.today
The European Union's wheat exports are projected to fall to their lowest levels in three years during the 2024/25 marketing year, as detailed in a recent report by the USDA Foreign Agricultural Service (FAS). As the world's second-largest wheat exporter, this decline will prompt key importing nations to seek alternative suppliers, reshaping global grain trade dynamics.
The primary factor behind this anticipated decline is a smaller wheat crop within the EU, which is expected to decrease by 5% compared to the previous year due to reduced harvested area. France, the EU’s leading wheat exporter, is forecast to experience a significant 20% drop in production, bringing it to the lowest level in nearly four decades. This reduction in output, combined with lower carry-in stocks, will severely limit the volume of wheat available for export.
Persistent adverse weather conditions in France have further exacerbated the situation by impacting grain quality. The result is a diminished supply of milling-grade wheat, while feed-quality wheat remains more abundant. With a smaller corn crop also in play, the demand for wheat as animal feed within the EU is expected to remain robust, with feed and residual use projected to increase by 1.5 million tons, reaching 46.0 million tons.
The constrained supply has led to a sharp increase in wheat export prices from France, which have risen by approximately 10% over the past month, making EU wheat less competitive relative to key rival Russia. Traditionally, the EU, Russia, and Ukraine have dominated exports to price-sensitive markets in the Middle East, Africa, and Asia. However, with Russia and Ukraine maintaining strong export levels despite their own smaller harvests, the EU is likely to lose market share in crucial markets such as Morocco, Algeria, Nigeria, and Egypt.
Adding to the EU’s challenges, favorable crop prospects in Canada and the United States are expected to heighten competition in major markets, particularly China. As North American wheat enters the global market at competitive prices, the EU will face increasing pressure to maintain its position in these key markets.
The projected decline in EU wheat exports represents a significant shift in the global grain market, with ripple effects likely to be felt across multiple regions. As the EU grapples with reduced production and rising competition, importers may need to diversify their sourcing strategies, potentially altering long-standing trade relationships.
Persistent adverse weather conditions in France have further exacerbated the situation by impacting grain quality. The result is a diminished supply of milling-grade wheat, while feed-quality wheat remains more abundant. With a smaller corn crop also in play, the demand for wheat as animal feed within the EU is expected to remain robust, with feed and residual use projected to increase by 1.5 million tons, reaching 46.0 million tons.
The constrained supply has led to a sharp increase in wheat export prices from France, which have risen by approximately 10% over the past month, making EU wheat less competitive relative to key rival Russia. Traditionally, the EU, Russia, and Ukraine have dominated exports to price-sensitive markets in the Middle East, Africa, and Asia. However, with Russia and Ukraine maintaining strong export levels despite their own smaller harvests, the EU is likely to lose market share in crucial markets such as Morocco, Algeria, Nigeria, and Egypt.
Adding to the EU’s challenges, favorable crop prospects in Canada and the United States are expected to heighten competition in major markets, particularly China. As North American wheat enters the global market at competitive prices, the EU will face increasing pressure to maintain its position in these key markets.
The projected decline in EU wheat exports represents a significant shift in the global grain market, with ripple effects likely to be felt across multiple regions. As the EU grapples with reduced production and rising competition, importers may need to diversify their sourcing strategies, potentially altering long-standing trade relationships.
