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Difficult start for trade in Europe

Труден старт за търговията в Европа

European Union wheat exporters face an increasingly difficult start to the new season as massive supplies of cheaper Russian grain kill competition, leaving the EU to rely solely on markets such as Morocco and China, traders said.

The picture is the stark contrast to last year, when buyers flocked to EU wheat amid disruptions to Black Sea trade caused by Russia's invasion of Ukraine.

Some European agencies are predicting that EU exports will eventually pick up speed given the mixed global supply picture and ongoing war risks, but that hypothesis looks increasingly unlikely.

As the 2023/24 season gets under way, Russia is holding onto large stocks from last year's record crop and is now expecting another, not worse, with analysts predicting the world's biggest wheat supplier will hit a new peak in exports.

The European crop monitoring agency MARS estimates in its latest forecast wheat production in Russia at 86.7 million tonnes, split between 62.6 million tonnes of winter wheat and 24 million tonnes of spring wheat.

"Russian wheat is the main threat to EU export sales in the coming weeks and months," German traders are emphatic.

"The unofficial floor export price in Russia, currently estimated at $230 per tonne FOB, is about $25-30 per tonne cheaper than Western European supplies," they added.

In the current situation, European hopes are again down to Morocco, which has overtaken Algeria as the main destination of wheat from the union in 2022/23. The country has announced its plans for up to 2.5 million tonnes of subsidized wheat imports, in the period July-September.

This, in turn, leads to a fight between member countries for the Moroccan market, and some countries may be left behind. An example in this regard is France, which is not sufficiently competitive with Romania and Germany.

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