PARIS: Even if Egypt can end a policy dispute over wheat imports soon, it will be too little, too late for French exporters struggling to offload stocks after a disappointing marketing year that highlighted the country’s reliance on North Africa.
The European Union’s biggest wheat grower, which usually sells about half of its production abroad, is having trouble clearing a record 2015 harvest, which is forecast to lead to its biggest end-of-season stockpile in 17 years.
Exports have gathered pace since the middle of the July-June season, in keeping with the tempo of recent years that has seen France start the export campaign slowly compared with cheaper Black Sea origins.
But the on-off trade with Egypt, the world’s top wheat importer, since late December capped French sales during its peak export period – leaving little time for exporters to find alternative destinations in a well-supplied world market.
Forecasters currently see French soft wheat exports outside the EU in 2015/16 falling below last season’s 11.4 million tonnes, despite the fact the record harvest yielded an extra 3 million tonnes to sell this marketing year.
“The fact is France will struggle now to go beyond 11 million tonnes in exports,” Alexandre Boy of consultancy Agritel said. “Exports should have been stronger at the start of the season to avoid being caught out at the end.”
French wheat has continued to pick up some sales to Egypt, including 120,000 tonnes booked on Wednesday by government buyer GASC.
But few traders are offering French supplies after the rejection in December of a cargo of French wheat sparked a row over what policy was applied for grain fungus ergot.
Signs that Egypt is moving back towards an internationally recognised ergot standard were seen as too late.
“If they (GASC) get back to normal import tenders, it’s going to be towards the end of the season when their local harvest is in full swing,” one French trader said of Egypt.
Consultancy Strategie Grains on Thursday cut its forecast for French sales to Egypt this season by a quarter to 750,000 tonnes, reflecting widespread sentiment that France is unlikely to sell much more than the 600,000 tonnes booked so far.
A recent run of sales to Morocco and some deals to Asia have bolstered French exports. But exporters say France needs to sell more earlier in the season, even if this means offloading grain at lower prices to vie with Black Sea suppliers.
“We tend to step on the gas from January. That’s fine when we have 11 million tonnes to export but when there’s 15 million tonnes to clear it’s too late,” Pierre Duclos of trading firm Lecureur told the annual conference of grain lobby France Export Cereales on Wednesday.
Egypt’s GASC typically makes about half of its purchases in the first three months of the marketing year and three-quarters during the first six months, France Export Cereales said.
Traders say French exports this season have been hampered by farmers’ reluctance to sell grain as prices have fallen, allowing other EU suppliers such as Poland and the Baltic countries to win market share in Algeria.
Moderate French wheat quality, meanwhile, has encouraged key clients like Morocco to take more wheat from elsewhere.
The French wheat sector is trying to reverse a decline in protein content, a key standard for millers. But it also needs to work on reducing moisture levels, which have prevented it from accessing Egypt’s private sector that imports as much as GASC, France Export Cereales said.