Record Russian wheat exports shake up EU's traditional markets

25 April 20243 min reading

The European Union (EU) has been losing market share in the Middle East and Africa as a result of the increasing dominance of Russian wheat in the region. According to figures from the US Department of Agriculture (USDA), during the first seven months of the 2023-24 season, EU shipments to North Africa decreased by 25 percent, while shipments to the Middle East plummeted by over 60 percent compared to the corresponding period last year.

The EU is struggling to cope with Russia's competitive prices in its traditionally dominant wheat markets in North Africa, Sub-Saharan Africa, and the Middle East, resulting in a loss of market dominance to Russian wheat. In these regions, the EU faces greater competition from Russia than ever before. According to the USDA's April World Grain Markets and Trade Report, shipments from the EU to North Africa in the first 7 months of the current 2023-24 season were down 25 percent compared to the same period last year. The EU suffered an even bigger loss in the Middle East market during the same period, with shipments falling by more than 60 percent. It is noteworthy that Russia increased its market share, especially in Saudi Arabia and Algeria, traditionally two of the EU's three largest export markets.

Source: Trade Data Monitor, LLC

Russia's record wheat stocks persist in making export prices more competitive than those in the EU. According to the USDA, Russia's wheat exports for this season are projected to reach a record high of 52 million tons. Additionally, the USDA has revised the EU's wheat export forecast for the 2023-24 period to 34.5 million tons, a decrease of 2 million tons from the March forecast.

Source: Trade Data Monitor, LLC
and Refinitiv

Saudi Arabia has historically been a top market for EU wheat, with the European Union capturing nearly 95- percent market share in the 5 years leading up to 2019/20. While wheat import demand in Saudi Arabia has declined in 2023/24 as domestic production increased due to high domestic procurement prices, government buyer Global Food Security Authority’s (GFSA) import preferences have shifted from EU to Russian wheat. GFSA is the sole importer of wheat, making purchases through international tenders. “Russian wheat supplies have become increasingly price competitive in these tenders, ousting the European Union as the top supplier,” USDA noted.

Russian encroachment on EU market share in North Africa is also evident in the case of Algeria. Algeria’s government-run procurement agency Office Algérien Interprofessional des Céréales (OAIC) is the country’s sole wheat importer, and it has traditionally relied on EU supplies. Just 5 years ago, the EU captured 85-percent market share in Algeria, but the government has since sought to diversify suppliers of bread wheat. In 2020, Algeria modified its wheat import restrictions, raising the rate of permitted insect-damaged grain, which allowed for imports of Black Sea origin. “Russia wheat exports to Algeria have since expanded significantly. With Algerian millers indicating satisfaction with Russian supplies, Russia and the European Union have battled for majority market share so far this year,” the report concluded.

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