Egypt’s announcement of its largest ever wheat order totaling 3.8 millions tonnes has paved the way for increased competition on the global wheat markets.
Negotiations with Russian suppliers have begun, and this is a sign of a shift away from the traditional European suppliers towards Russia and other exporters.
The trend is growing ever since Russia became the leading world wheat exporter in 2015. This position was strengthened by Russia’s response to EU sanctions regarding Crimea.
EU wheat exports are declining
The EU’s export market for wheat is facing major challenges.
Due to their competitive pricing and guaranteed volumes, traditional buyers such as Egypt, Morocco and Tunisia, are now turning to Russian and US suppliers.
The EU soft wheat exports will fall by 9 million tonnes from the current average of 35 millions tonnes.
France, which is the EU’s biggest wheat exporter, felt this impact in particular due to this year’s poor harvest.
In the Middle East and North Africa region (MENA), Russia has become the main supplier of wheat to Algeria, surpassing France.
This change is partially due to the diplomatic dispute between Paris and Algiers about the Western Sahara, and it is indicative of the broader trend that countries are seeking stable and affordable providers.
With its ability to supply large quantities at competitive prices, Russia is becoming the preferred supplier of many nations in this region.
In addition to this latest development, several African countries, including Ghana and Nigeria, as well as Ivory Coast have suspended their exports of cereals.
This decision will further boost the demand for wheat imported in the region.
This year, the three Maghreb countries of Morocco, Algeria and Tunisia purchased 19.5 millions tonnes of wheat from overseas suppliers, up from 17.1 million tons last year.
These countries become more dependent on imports as local production falls, creating an opportunity for major exporters such as Russia and the US.
Russia’s wheat output remains strong
The Russian government expects to export 43 millions tonnes of wheat in 2018, despite a slight drop from the 56,000,000 tonnes exported in 2023.
Russia’s third-best wheat harvest in five years (82 million tonnes) is well positioned to continue its dominance on the global market.
The weaker rouble also favors Russian wheat imports. This allows the country to provide competitive prices and attract more buyers, thus gaining market share.
The EU should be aware of the growing dominance Russian wheat has on traditional European markets.
Experts suggest that the region needs to “more aggressively agricultural diplomacy” in order to counter Russia’s impact.
To maintain the EU’s credibility in the face of Russia’s growing market share, it is important to maintain and strengthen European trade flows.
The EU’s ability, in a world of strategic commodities like wheat, to secure export markets is crucial to the future of its agricultural sector.
The “Russification of the World Market” by Russia is expected to increase as global wheat dynamics continue their evolution.
The MENA region, including Africa, is looking for suppliers that can provide volume and price guarantees in line with their economic capabilities.
Due to the interconnectedness of Russia’s geopolitical goals and its agricultural strategy, European producers are faced with a dual challenge: declining volumes and falling price.
The EU is at risk of losing ground to Russia on the global competitive wheat market if it does not make a concerted effort in order to increase its export presence.
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