MOSCOW/PARIS (Reuters) — Russia and the European Union are expected to return to strong competition for the rank of the world’s biggest wheat exporter in the new 2017-18 marketing season because prospects for their crops are bright, analysts say.
For global consumers, especially in North Africa and the Middle East, this intense rivalry, together with strong sales from Australia, could translate into lower prices.
“If weather is normal, world wheat prices will grind lower into late summer, but we have to produce a crop,” said Dan Basse, president of AgResource Co.
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“Wheat’s biggest problem is static world trade and the ongoing fight for world wheat market share.”
Russia harvested a record wheat crop in 2016 and is competing for the rank of the world’s top wheat exporter with the United States in the current 2016-17 season. EU’s supplies are weak this season after a poor crop in France.
Russia’s prospects for the 2017 crop look good and record wheat stocks will help its exports next season, analysts said.
Basse expects Russia’s wheat stocks to increase twofold from a year ago to a record 12 to 13 million tonnes by July.
“Right now Russia looks like it should be repeating 2016-17,” said Matt Ammermann, commodity risk manager at INTL FCStone.
At the same time, EU’s crop is expected to rebound next season, and French consultancy Strategie Grains sees Russia’s wheat exports at 29.6 million tonnes in 2017-18 while the EU would ship 28.6 million tonnes.
Russian IKAR and SovEcon agriculture consultancies expect Russia’s 2017-18 wheat exports to be 28 million tonnes and 27 million, respectively.
Russian farmers seeded the largest area in seven years with winter grains for the 2017 crop partly because of a weak ruble, which boosted revenues in local currency terms.
The ruble has subsequently rebounded to around 57 per dollar, the highest level since mid-2015, and its recent strength could slow exports.
Meanwhile, their counterparts in the United States slashed their winter wheat plantings to the lowest in more than a century.
