A slower pace of EU wheat exports contributed to lower wheat prices in Europe and the UK in the first half of the 2023/24 marketing season, according to global analysts.

Exports from the EU are 7% slower than last season with 16.9 million tons (July 1 - January 14, data from the customs surveillance of the European Commission). This equates to only 54% of the European Commission's current export forecast for the season (31 million tons).

Last season, the EU exported 57% of the entire season so far this year and 60% in 2021/22. The pace of exports needs to increase to prevent the zone's wheat stocks from rising, given the stronger pace on import. The EU has already contributed 79% of its forecast for the entire season, compared to just 51% so far last season.

One of the main reasons for the slowdown in EU exports is the competition with the Black Sea, especially Russian supplies.

The 2023 Russian wheat crop was very large, at an estimated 91 million tons, and just 1 million tons below last year's record (USDA). Despite the export price regulations, Russian wheat is still highly competitive and exports have taken off quickly. The strong pace continued into the winter, with SovEcon estimating that Russia will export more than 30m tonnes by the end of this month (LSEG). This would be 15% more than the first seven months of 2022/23.

But there are signs that price pressure from Black Sea exports may be starting to ease. The gap between EU and Russian prices narrowed and Egypt's state buyer GASC bought French wheat for the first time in five and a half months this week. GASC bought 60,000 French wheat at $284.50/t including costs and freight.

Another factor likely to help EU wheat become more competitive is the weakening of the euro against the US dollar from December levels.

SovEcon forecasts that Russian wheat exports could reach a total of 48.6 million tonnes this season. To meet that target, Russia will still need to supply about 3.7 million tonnes each month from February to June, but less than the average of 4.3 million tonnes so far this season.

There are also reports that Ukraine's exports could fall by 20% in January due to problems around the Suez Canal and in the Red Sea.

This could mean greater opportunities for EU exports and perhaps some relief in terms of price pressure on European wheat prices for the remainder of the 2023/24 season.