High prices in Australia, drought in Argentina, but chiefly, the weakening euro against the dollar: French and European cereals are enjoying regained competitiveness, especially in exports. Wheat, particularly, has had a very good year, unforeseeable four months ago. FranceAgrimer, the French farm office, pointed out that - at mid May, licenses issued to European wheat exporters since the beginning of the 2009/2010 campaign have reached 15.4 million tonnes (mt). Certainly less than the 18.8 mt of May 2008/2009, but much more than the 7.6 mt of 2007/2008, when the euro hovered around $ 1.60.
The fall of the euro is probably the most decisive factor for this increase in competitiveness, allowing the EU to make a comeback on export markets. The Maghreb, Egypt, as well as Yemen, Saudi Arabia and Sub-Saharan Africa, who are ordering less Argentinean wheat have become buyers with Algeria ordering 500,000 tons of wheat for June and July. Even more exceptional, for the first time in ten years, a cargo of 30,000 tons of European wheat will leave the port of Rouen at the end of May for Mexico!
Good news for European producers; nevertheless, this windfall is a “double edged sword” as pointed out in the Figaro. Indeed, a stronger dollar against the euro leads to higher costs for EU farmers, since producers buy their farm input in dollars.