Europe may struggle to fill Nov-Dec Mena wheat demand

Large commitments of milling wheat sold to buyers in the Middle East and north Africa (Mena) region for November-December loading, plus additional purchases to come, will keep buyers mostly dependent on EU wheat as well as disrupted Black Sea exports until new-crop arrives from the southern hemisphere.

Wheat importers across the Mena region are set to import 5.56mn-7.06mn t of wheat in November-December, comprised of state tender purchases from Algeria, Saudi Arabia, Tunisia, Pakistan and Jordan, along with state buying and private market demand from Egypt, Morocco and Libya (see table).

Egypt is the country with the highest demand for the coming months at up to 3.5mn t, and also potentially the largest variable. State importer Future of Egypt (FOE) is set to return to the market to buy 1mn-1.5mn t of milling wheat for November-December, and buyers in the private market continuing to buy wheat hand to mouth are expected to import 1.2mn-2mn t, according to market participants. Whether Egypt looks to import 2.2mn t or 3.5mn t could determine how tight European supplies are for the wider region.

The current pace of exports from Russia, Ukraine and Europe leaves little room for fresh demand in the Mena region in the coming months, as Ukraine's Danube ports and Russia's Baltic ports remain unable to make up for the capacity effectively lost from these countries' Black Sea ports since early July.

Russia could export 3mn t of wheat from the country's Baltic ports in November-December — given Argus' estimate for Russian exports in October — helping to fill a large chunk of demand from Mena buyers.

As for Ukraine, the market could expect 250,000t of wheat exports in November and December, based on an average of 126,000 t/month of seaborne wheat in August-October, vessel-tracking and preliminary line-up data show.

That said, exports from both countries for the coming months remain highly susceptible not only to shipping risks but also weather-related issues. The colder months bring a risk of freezing in the Baltic Sea, affecting Russian and EU Baltic ports, while traders at Ukraine's Danube ports are hoping for wetter weather to top up river water levels and finally ease shipping after months of drought.

In the EU, wheat exports also tend to slow into November and December after four months of heightened activity directly following the July harvest. Since 2013, the bloc has shipped on average just over 16pc of its total exports for the year in November-December, at which point the region's spring crops — such as corn or sunflower seeds — take up export capacity, particularly in Romania and Bulgaria. An export pace in line with the historical trend would put EU wheat export capacity for November-December this year at just over 5mn t, based on Argus' forecast of 31mn t of wheat exports from the bloc for the full 2026-27 (July-June) marketing year.

Total exports from Russia, Ukraine and the EU could come to almost 8.3mn t for November-December. This includes some feed wheat as well as milling, particularly from Romania and Bulgaria, which harvested a lower-quality crop compared with other EU exporters. Sellers in Russia and Ukraine are set to continue prioritising exports of pricier milling wheat.

The combined exports leave little room for further milling demand from the Mena region in the next two months, or indeed from other global buyers. Alternative suppliers to Mena buyers are limited, and — in the case of Argentinian or Australian new-crop — only likely to be available in bulk from late December, and still liable to weather-related risk before then.

By Erik Metaliaj

Mena wheat demand, Nov-Dec t