EU wheat to maintain competitive edge over US

By Kacey Culliney contact

- Last updated on GMT

The EU has granted a record number of wheat export licenses for this season
The EU has granted a record number of wheat export licenses for this season

Related tags: International trade

More bakers could source more EU wheat as a strengthening dollar and uncertain weather conditions in the US make prices more competitive, says a grains expert.

Total EU common wheat export licenses issued this season (2014/15) have surpassed last season’s record by almost 12%, the UK’s Agriculture & Horticulture Development Board (AHDB) noted in its recent report.

Wheat export licenses granted by the EU were 31.3 Mt compared to US commitments of 23.3 Mt which were down 26% on last year.

Amandeep Kaur Purewal, senior analyst at AHDB Market Intelligence, said the EU would likely maintain this competitive edge.

“This year you’ve seen the dollar strengthen against the euro, so that’s made the EU much more competitive on the global market which is traded in dollars,”​ she told BakeryandSnacks.com.

“The EU has been the go-to region for getting wheat this year and looking forward, next year could possibly be the same,”​ she said.

The world’s top wheat importer Egypt, for example, had favored a lot of European wheat this year, she said, and had just lodged a large tender for 60,000 Mt of this season’s EU wheat.

“EU wheat is the most competitive against Russia and the US,”​ she said.

More domestic use?

wheat trade farmers

Purewal said as a result European bakers could turn more to using domestic wheat crops this coming year, given the pricing and steady quality of the crop.

“Last year, the French milling wheat crop wasn’t as great because of quality issues because it rained a lot during harvest. It’s unlikely it’s going to be as bad as that as we look forward to the coming season 2015/16, and if it’s not, there will be more good quality milling wheat on the market,”​ she said.

This in turn would reduce premiums on milling grade wheat, she said, making domestic crop more attractive to European bakers from a cost stand-point.

However, she said some manufacturers may still prefer to pay higher premiums for wheat they had previously worked with.

Last year in the UK, for example, Purewal said many manufacturers continued to import from Canada because of the high protein content and protein issues with local wheat, despite a higher cost.

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