Nogger's Blog

08/06/11 -- Offre et Demande Agricole have cut their French wheat production estimate to 31 MMT, 19% down on last season. It may be worth considering that the French consultancy have been particularly bearish on the extent of the damage done by the spring drought across Europe, coming in with the lowest estimate in a recent Bloomberg survey of seven leading analysts and traders into the size of the EU-27 wheat crop this year.

The USDA's agricultural attaché in Paris meanwhile estimates the wheat crop at 32.3 MMT, a fall of 15% on last year. FranceAgriMer have today pegged soft wheat output at 30.9 MMT and durum at 1.9 MMT, for a combined 32.8 MMT, 14% down on 2010.

To get things into perspective these numbers take around 6 MMT off the world export market in 2011/12. Yet Russia alone is seen adding that kind of volume, with a further 7.5 MMT coming onto the market from Ukraine and Kazakhstan.

All we are seeing here is the balance of exporting power switching away from the EU and the US back to the Black Sea next season. Remember that as recently as three years ago the EU was only exporting 12 MMT of wheat a year. Despite production downgrades this will be the fifth year in a row that the EU will produce more wheat than it consumes.

Although yields will be low I think that quality will be good this year as things stand at the moment.

The 2010/11 season was an opportunity to fill the void left when the cheap shops had all sold-out and make some nice money. I'd say that 2011/12 might be more of a year to let Matalan and Primark swamp the market with their cheap tat whilst picking off the occasional discerning Algerian fashionista that wanders into our designer boutique.