France’s Wheat Exports Reach a Record Level in MY 2022/2023
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France’s Wheat Production for MY 2022/2023 Is 2 Mmt Lower YoY
France Wheat – In the last five years, France’s Wheat production reached its highest volumes in MY 2019/2022, with 41 Mmt. After that, volumes declined to their lowest in MY 2020/2021, 10 Mmt YoY, due partially to dry weather and 0.74 Mha decrease in harvested area. In MY 2021/2022, a 0.76 Mha YoY increase in harvested area in France resulted in a 37 Mmt Wheat production, 6 Mmt higher YoY, but 4 Mmt lower than MY 2019/2020. For MY 2022/2023, the USDA estimates that France’s Wheat production will decrease by 2 Mmt YoY, due partially to a 0.17 Mha decrease in harvested area. How does production decline result in France’s Wheat exports in MY 2022/2023?
Figure 1: France Wheat Production (MY 2019/2020 – 2022/2023)
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France’s Wheat Production for MY 2022/2023 Increases YoY Despite Lower Production
France’s Wheat exports reached 4.5 Mmt in MY 2021/2022, only 0.4 Mmt higher YoY despite a 6 Mmt increase in production. The lowest volume concerned the 355 kmt decrease YoY in April 2021 when the war in Ukraine began. Nevertheless, In MY 2022/2023, France’s Wheat exports reached 6.6 Mmt between July and January, 4 Mmt higher YoY, despite production declining by 2 Mmt YoY. Towards which markets did France increase its YoY Wheat exports in MY 2022/2023?
Figure 2: France Wheat Exports (MY 2020/2021 – (Jul 2022 to Jan 2023)
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North Africa Is France’s Leading Destination for Wheat in the MY 2022/2023
France’s leading destination for Wheat in MY 2021/2022 was China, with 1.3 Mmt, yet, 429 kmt lower YoY. Algeria ranked second as France’s Wheat destination, with 1.2 Mmt. Between Jul 2022 and Jan 2023, France’s Wheat exports to Algeria surged to 2.2 Mmt, 1,6 Mmt higher YoY. Meanwhile, exports to Morocco reached 1.2 Mmt, 1.1 Mmt higher YoY, and 0.6 Mmt to Egpyt (100% higher YoY). So far in MY 2022/2023, France is exporting more Wheat to North Africa, as the freight costs are lower than for other exporters such as Australia or Canada. How do France’s Wheat costs differ from Australia’s for North African countries?
Figure 3: France’s 5 Top Wheat Destinations
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Freight Costs Offset High Wheat FOB Prices From France to Morocco and Algeria
Australia’s Wheat FOB prices remained lower than France’s in 2022, with the highest prices difference being USD 110 /mt and USD 107/mt in Mar and April, when France’s FOB prices peaked at USD 430 /mt and USD 434 /mt, respectively. Since August 2022, France’s FOB prices have decreased to a constant value (USD 339 /mt on average). Despite France’s FOB prices being higher than Australia’s, the country remains the leading exporter to Algeria and Morocco; thanks to the lower freight costs (USD 26 /mt on average in 2022), France offsets the higher costs to be the cheapest option for North African countries. By early 2023, CFR prices for Wheat from France to Algeria and Morocco have dropped to as low as USD 345/mt, as freight costs only average USD 18/mt.
Figure 4: Austria and France Wheat FOB prices, and France CFR average of Exports to Algeria and Morocco (Jan 2022, (1th-19th 2023)
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In a Nutshell
France is one of the leading European producers and exporters of Wheat. However, in Q2 2022, exports hit their lowest level due to the war in Ukraine, which affected global commodities trading such as Wheat, Corn and Vegoils. In MY 2022/2023, although the USDA estimates that France will decrease production YoY, the country exports more Wheat YoY.
The increase in France’s Wheat exports in the first half of MY 2022/2023 is primarily due to increased exports to Algeria and Morocco. Despite France’s Wheat’s higher FOB prices, the geographical distance from North Africa allows the country to export Wheat at low costs and compete with other cheaper exporters such as Australia.
France’s Wheat exports as a percentage of total production are increasing YoY. Will France move towards a Wheat export strategy for the following seasons?
