Wheat: Standing between a strong EU demand and crushing Black sea regional market forces
February 22, 2018 at 10:00 AM ,
Starry Night Ltd.
BULGARIA. Exports to the world during season 2016-17 reached record levels, with total shipped volumes amounting to as high as 4,168,623 mt or 73.62% of aggregate output last year. Competitive prices kept the export momentum strong till the end of the marketing year, leaving a carry-over of just 179,000 mt at the beginning of the current season, according to local authorities. Since the majority of national output is sent abroad, with the greater share going to EU markets, on an annual basis imports represent a minor share.
Wheat: gaining an edge over EU markets while reckoning with regional market forces
At the end of harvest 2017-18, which produced the highest output – 5.9 mmt for at least two decades, market players foresaw a strong export season, and their predictions bore fruit on some foreign fronts. The relatively higher quality characteristics of the grain this year, together with the spurred strong demand from EU countries since early in the season, has pushed exports to the markets of the Union to all-time high. By the end of last week, shipped quantities to the EU market amounted to 2,931,614 mt while at that time last year, shipped volumes came to 2,231,433 mt.
|
Harvest 2017-18 (01.07.2017 - 16.02.2018) units in MT |
|
|
Beginning availability |
179,000 |
|
Aggregate output |
5,900,000 |
|
Imports |
50,193 |
|
Domestic consumption |
1,145,600 |
|
food |
626,000 |
|
feed |
318,000 |
|
seeds |
180,000 |
|
industrial usage |
21,600 |
|
Exports to the world |
3,389,010 |
|
to EU markets |
2,931,614 |
|
to rest of the world |
457,396 |
Source: Bulgarian Ministry of Agriculture
However, even though exports to the Union are booming, competitive market forces within the Black sea basin have devastatingly influenced exports to non-EU markets on a year-to year basis, leaving in doubt local market players that the trend will be ever reversed by the beginning of the upcoming season. By the 16th of February 2018, local exports to non-EU markets came to 457,396 mt while by that time last year, shipped volumes to markets outside the Union reached 1,296,481 mt. Oversupply of wheat within the Black sea region has taken its toll on local exports to markets outside the EU. According to the most recent USDA report on World Agricultural Production, Russia realized a wheat output of 85 mmt, while, together with its strong export rate up-to-date, by the end of the marketing year, the country is expected to regain its status as a top wheat world exporter. As a result, local exports to such destinations have suffered heavily!
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