France may struggle to sell the much larger wheat crop it expects to produce this year, as its export options have been reduced due to a decrease in demand from Algeria and China. Also, Black Sea grain is cheaper.

France could stockpile large amounts of wheat, or sell more grain on livestock feed markets if overseas demand is low. Either result could lead to prices that are below production costs. This trend has been the cause of farmer protests over the last year.

The farm office FranceAgriMer projected Wednesday that French soft wheat exports to outside the EU would be a modest 7.5 millions metric tons in 2025/26, which contributed to a forecast of 21-year-high end-of-season stock levels.

Last season, sales to Algeria and China - two of France's largest wheat buyers in the past - stalled due to a diplomatic fallout with Algiers, and a general decline in Chinese imports in light of a glut in domestic supplies.

The French crop was smaller than usual in 2024, but the steady demand for Moroccan and West African products, as well as sporadic sales into Egypt and Thailand, helped absorb last season's excess. But it may not be enough.

Rory Deverell of Black Silo Commodity Consulting said, "The hard reality is that France faces a massive challenge in order to achieve a 7.5-million-ton export programme."

Algeria's purchase of 1 million tons of wheat this week, which was a result of a price increase in Russia due to tight supply in the world's largest wheat supplier, may only be able to provide slack in the short-term.

A German trader stated that "Russia, Ukraine and Romania will likely dominate wheat exports over the next few months." "The west EU is at risk of becoming a niche exporter of wheat."

Germany and Poland could also struggle, but overall EU exports will be boosted by Black Sea neighbors Romania and Bulgaria.

Another export obstacle is the recent rally of the euro against dollar, which was a result of the policies of U.S. president Donald Trump.

Western European wheat may find opportunities on lower-priced markets for feed, particularly if the harvest fails to meet milling standards. Traders have reported that there are concerns about low protein levels and the possibility of this week's rainfall affecting the quality of wheat not yet harvested.

The return of EU quotas for Ukrainian wheat could reduce competition within the EU.

Maize will compete with wheat as a feed, according to traders. A bumper harvest in Spain is also expected to curb demand for the traditionally largest EU buyer. FranceAgriMer expects French intra-EU trade to remain stable compared to last season.

Another German trader stated: "It's hard to imagine where wheat from the west EU could be sold."

(source: Reuters)