Europe: Wheat demand, supply in delicate balance

A Strategie Grains report for the crop year 2007-8 says EU wheat supply and demand remained in 'a delicate equilibrium'. There was no change to the import forecast for the crop year 2008-9, with estimates remaining at 4 metric tons, while intra-EU trade remained at 20 MT. A reduction in the demand for wheat for human consumption (-1 MT) is more than offset by an increase in animal sector demand (+1.6 MT). The report sees the real decrease potential depending on the competitive relationship between wheat and competitor cereals in the animal feed sector. The report sees a possible transfer of demand from maize to other cereals. Prices have kept this trend down, but a small reduction in the wheat or barley price "would now be sufficient to trigger a significant modification in feed composition, with demand currently allotted to maize transferring to wheat and barley." The report sees this happening initially in the poultry feed sector and then in pig feeds. For the crop year 2008-9, the report sees estimated maize production in the EU lowered by 0.85 MT to 57.3 MT, which is still set to be 10.2 MT more than in 2007-8. While industrial maize consumption is set to be 1.3 MT more than in 2007-8 due to the growth in bioethanol production, consumption in animal feeds is reduced sharply (-1.5 MT). Contrary to the situation in northern Europe, the report says wheat has not yet recaptured demand from maize in France and the southern EU countries.