MENA – driver of the global grain market

Source

APK-Inform

38588

 Despite of growing production MENA is increasing grain imports and replenishing its stocks. According to analysts, the region will import more than 50 mln tonnes of wheat in 2015/16 MY. The given fact encouraged APK-Inform to hold the 2nd international event Middle East Grain Congress devoted to global grain market development with emphasis on MENA region. 

We chose Dubai, UAE as a venue for the conference, as it is large trade hub in the Arab world. Suitable location and access to markets of Persian Gulf, North Africa and Middle East let us to gather about 150 participants from 26 countries whose activity is tied with grain and oilseeds trade. 

Om EL Nour, Calipso Invest Crop and Sunaco Companies presented as the sponsors of the event. Iranian Federation of Food Industries Associations (IFIF) supported the conference.

 

 

 

Such kinds of event lets to get hard facts straight from the tin. Middle East Grain Congress was not an exception and provided more deep information than standard supply&demand balances.

First of all, we would like to emphasize Andrei Agapi Sr. Grains Editor, Platts among all speakers. According to his data, the global wheat market faced overproduction in the current season due to output growth within last 5 years and high carry-over stocks. In particular, Ukraine increased wheat production to 27.5 mln tonnes against 24.5 mln tonnes last year, Russia – to 61 (59.1) mln tonnes, USA – to 55.8 (55.1) mln tonnes, Australia – to 24.2 (23.1) mln tonnes and EU – to 149.5 (149.1) mln tonnes. Moreover, the speaker pointed out India as new importer of wheat. Possible significant import volume and high quality requirements that could be met by Australia are the key features of the country. Moreover, A.Agapi mentioned possible influence of China that is planning to sell about 12 mln tonnes of corn on domestic market.

 

Alex Younevitch, EMEA Freight Markets/Platts reminded about low freight rates observed on global market this season and suggested that the given rates to prevail during whole 2016.

Matt Ammermann from FCStone started his speech with straightforward and succinct words “Low prices keep on lowering” became the most quoted twit of the congress.

Egyptian market with its ergot situation was under strong debate during the congress, so speakers from Egypt attracted high attention. Hesham Soliman, Chairman, Mediterranean Star for Trading Company said the ergot problems were caused by conflict of two ministries resulted in harm for both suppliers and importer. At the same time, he promised Egypt would not return wheat cargoes bought on tenders anymore and pointed out that the given problem is under discussion at the highest level in the country. However, some participants particularly those from France took the promise with a pinch of salt calling Egypt the most unpredictable direction for exports. Egypt is largest wheat importer and growing population leads to growth of consumption by 400 thsd tonnes annually and higher import requirements. Nowadays, wheat products cover 42% of average diet in Egypt and the country consumes more than 53 thsd tonnes or one Panamax of wheat daily.

Other Egyptian expert – Ali Ramadan from Egyptian Australian Company for Trading Agency – pointed out that lower import by GASC caused by ergot conflict is forcing private companies to raise import when many of them could not increase floating assets rapidly due to difficult economic situation in the country. H.Soliman supported this opinion saying that 2016 will be the year of Coasters for Egyptian private importers, as lack of funds will lead to higher purchases of small cargoes.

Speaking about Egypt we need to quote Dian Donev from Scanwel Commodities “Two last seasons saw higher supplies of wheat from Central and North Europe to Egypt. Increase of supplies of Romanian wheat was the most remarkable – Egypt imported about 1.9 mln tonnes of the grain in 2015!” The expert pointed out that Bulgaria could ship about 2.88 mln tonnes of wheat in 2015/16 MY, Romania – 4 mln tonnes and Poland – 3.2 mln tonnes.

 

Ismail Fahmy, Regional Middle East Manager, Groupe Soufflet spoke about French wheat. Despite problems with shipment to Egypt, position of French grain in MENA region is still strong. Morocco is actively buying wheat from France to replenish its stocks. The share of French grain in total wheat imports to Morocco totals 45%, to Algeria – 70-80%. The expert forecast that France will supply more than 60% of its wheat exports in 2015/16 MY outside the EU.

Presentation by Kaveh Zargaran, Secretary General at Iran Food Confederation devoted to Iranian grain market attracted high interest. He pointed out that Iran had reduced grain production by 26% within last 10 years. Output can decline by additional 5% to 2020 and by 10% to 2050. Taking to account growing population, wheat consumption can reach 20 mln tonnes by 2025. K. Zargaran mentioned that current ban on wheat imports to Iran is temporary and is traditional for period of purchase program performance. Iran can resume wheat imports in several months.

The conference was accomplished with presentations from Ukrainian experts. Lyulko Dmitriy, Deputy Director of Sales and Purchases of grains Astarta–Kyiv forecast Ukraine can export about 40.4 mln tonne of grains and oilseeds in 2015/16 MY despite expected decline of production. Egypt (27%) and Indonesia (16%) will be the key importers of Ukrainian milling wheat this season. Spain (24%), the Netherlands (12%) and Egypt (12%) will be the main destinations for Ukrainian corn.

Summarizing results of the event, we would like to focus on future prospects that could be rather bright taking to account voiced estimations and forecasts.

 

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