Global Wheat Outlook: EU Focus
BMI View: We forecast total wheat production in the 28 countries of the EU to stagnate at around 141.0mn tonnes in 2014/15, as farmers have continued to favour wheat over barley and corn because wheat prices have remained more competitive. Strong output for the EU-28 in 2014/15 will prevent prices in the bloc from rising significantly over the coming months. However, because EU wheat prices experienced a weaker short-term rally than US prices in recent months, we expect more export demand to shift from the US to the EU at the start of the 2014/15 season, providing some support for EU prices.
We forecast overall wheat production in the 28 countries of the EU to stagnate at around 141.0mn tonnes in 2014/15. Farmers have continued to favour wheat over barley and corn, as wheat prices have remained more competitive, and weather conditions during plantings have been quite favourable, supporting yields. Local industry sources have indicated that of the 141mn tonnes of wheat expected to be produced in the coming season, 137.5mn tonnes will be soft wheat and the rest will be durum wheat. As a result, soft wheat stocks are forecast to increase from 13.1mn tonnes to 15.8mn tonnes in 2014/15, according to Strategie Grains.
Another season of strong output for the EU-28 in 2014/15 will prevent EU prices from rising significantly over the coming months. We expect EU wheat prices to trade largely sideways in the coming months; import demand at the moment is very subdued, as the region has low stocks and Russia has made a strong comeback on the global market in January.
|Paris Wheat (EUR/tonne, weekly)|