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The disastrous French wheat harvest this year and the impact it has had on the European grain market are expected to affect trade flows, but not global prices.
Speaking at the AHDB Grain Market Outlook Conference in London, Jack Watts, lead analyst for the AHDB Cereals and Oilseeds said that the development of Chinese wheat stocks on the global market and Russian production and exports are expected to have a long-term impact on the way the market is heading.
At present there is confidence in the supplies on the market and wheat is trying to find more demand min the feed sector.
Globally, demand is expected to grow and this is forcing up production.
“There is gentle growth in demand and the production bases are more than capable of keeping pace with demand,” he told the conference.
Global demand for 2016-2017 is expected to reach 732 million tonnes and the market is expected to be supplied though strong growth in production in southern hemisphere countries – in particular Australia and Argentina.
However, Mr Watts added that there are concerns about the protein content of the wheat being produced globally.
Weak sterling should see more competitive prices in the UK, but with strong export availability the markets are expected to be marked by competitiveness rather than price.
Mr Watts said the global market is starting to see concerns over a lack transparency, particularly regarding the stocks on the Chinese market.
And he warned that a lack of transparency could see a repeat of the “1972 Great Grain Robbery”, which saw the purchase of 10 million tonnes of US grain (mainly wheat and corn) by the former Soviet Union at subsidised prices, resulting in higher grain prices in the United States.
While the EU has led the way as the largest wheat exporter in recent years, Russia is expected to take the lead in 2016-2017, with exports forecast to rise to 30.7 million tonnes.
However, he warned that there is a transparency issue over the Russian crop.
The poor crop in France this year, which was down by 30 per cent and also saw reduced quality, is leaving markets, particularly in North Africa open for other exporters to exploit.
This will also have a knock-on impact to other markets around the world.
Mr Watts concluded that wheat is still a very political grain because of its importance in feeding the global population and it only has a marginal importance to the livestock feed sector.