Top French Wheat Shipper Sees Exports Falling to 15-Year Low

August 10, 2016 04:55 PM
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InVivo, France’s largest wheat exporter, will need to supply customers with grain from other nations after heavy flooding devastated the crop, potentially leaving exports at their lowest since 2001.

Shipments of soft wheat from France, the European Union’s top producer, will decline 40 percent this year to 11.5 million metric tons, according to an estimate from InVivo, a union of more than 200 cooperatives. The company will need to tap supplies from countries in the Black Sea region, northern Europe, North America and Argentina, it said in a statement e-mailed Wednesday.

"This year, France’s traditional customers will be provided with wheat from other origins and with French wheat when the opportunities arise," said InVivo, which counts on production from more than 300,000 farmers. "This is how InVivo Trading will be able to retain traditional French wheat customers."

French wheat yields fell to the lowest level since 1986 after rains that even flooded metro subway stations in Paris wrecked this year’s crop. That prompted the Agriculture Ministry to cut this year’s output forecast by 21 percent last week to 29 million metric tons. Until mid-July, analysts expected production to be 35 million to 37 million. Forecasts were lowered after the harvest started.

Animal Feed

France has never experienced such stormy conditions in May and June and the wet weather may mean the nation, know for its milling-quality wheat, will have to sell the grain for animal feed, InVivo said. It’s still difficult to have a view on what percentage of the crop will be high-enough quality for flour production, the company said in an e-mailed response to questions.

Test weight, a measure of the grain’s ability to make flour, is the grain’s main specification that seems to be affected by the rains, InVivo said. This means French wheat could still be mixed with other grain to improve quality. While France is a consumer of feed wheat, it also exports to Spain and Asia.

"Cooperative and export silos also have a lot of tools to split, clean and segregate qualities," InVivo said. "They will work as much as possible to create good quality milling wheat lots for millers or export."

Market Share

France will see its position in international markets shrink after the bad harvest, with its market share falling to 7 percent, compared with 12 percent a year ago, InVivo estimates. The company will be able to maintain "regular and safe" supply to the main buyers of French wheat and can also provide grain from other origins to guarantee "safe medium-term supply to our customers."

While poor weather is also hurting production in Germany, the EU’s second-largest grower, as well as Poland, Belgium, the Netherlands and Luxembourg, there’s so much wheat coming from other countries that prices are unlikely to rise, InVivo said. Heavy rainfall is also expected to reduce crops in the Baltic countries, said Linas Agro A/S, one of the largest exporters of Lithuanian grain.

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