Consulting firm Strategy Grains has slashed its forecast for wheat demand in the European Union in 2021/22 as high prices erode exports and prompt industrial processors to switch to corn.
In a monthly grain report, the consultancy lowered its outlook for EU exports of common wheat or common wheat by 1.6 million tons to 30.4 million tons.
Together with a reduction in the forecast use of wheat in animal feed in favor of maize within the EU, this means that Strategy Grains is increasing its forecast for EU common wheat stocks by more than two million tonnes by the end of the 2021/22 season next June to just over 12 million tons.
"The situation is on the verge of tipping over, especially in France. Wheat prices now have great potential for decline".
European wheat prices hit a new 14-year high today as strong international demand fuels availability concerns in exporting countries.
However, Strategy Grains says the wheat market lacked factors to justify further price hikes unless the current wet weather in Australia caused significant crop damage or Argentina limited exports.
French prices have come under further pressure as a result of a change in Algeria's import conditions, which favors Russian deliveries.
The competitiveness of maize against wheat and barley led Strategy Grains to revise its forecast for the use of maize in the EU as fodder by 1.5 million tonnes upwards.
Attractive prices and a large EU harvest should also lead to heavy use of corn in ethanol with favorable margins for the biofuel, it said.
The increased demand prompted the consulting firm to increase the outlook for EU maize imports in 2021/22 by 1.1 million.
For next year's harvests, Strategy Grains currently expects farmers in the EU to sow a little less wheat and maize, but slightly increase the barley acreage.
Source
Hansa Terminhandel GmbH
