The European Union, traditionally a huge wheat exporter, may import more U.S. wheat in coming months because of low U.S. prices, traders and analysts said this week.
"U.S. wheat prices have dropped so low that more sales to the EU are on the cards in the near future," one trader said. "It may sound like selling sand to Abu Dhabi but if the price is attractive U.S. wheat will be imported."
Traders said U.S. soft red winter wheat for February shipment from the U.S. Gulf is currently priced around $315 tonne fob, way under French wheat at around $342 a tonne fob Rouen and German wheat at $361 a tonne fob Hamburg.
"High feed wheat prices, especially in Germany, are likely to generate more interest in wheat from the U.S. and possibly South America," one German trader said.
A poor EU maize harvest in summer 2012 coupled with the decline of grain exports from Ukraine and Russia following their poor crops means animal feed wheat costs more than bread wheat in parts of the EU.
Feed wheat for February delivery is above Hamburg milling wheat at 270 euros ($363) a tonne.
The EU regulates wheat imports but licences to import a hefty 471,000 tonnes of U.S. wheat are still available in the annual reduced-tariff grain quota, traders said.
The EU awarded just over 100,000 tonnes of U.S. wheat imports in the first two rounds of the annual reduced-tariff grain quota in early January. But no U.S. wheat was sought in the third round last week.
Low Black Sea wheat exports, notably from Ukraine which usually covers much of the EU's feed wheat import needs, means forecasts are still for an overall fall in EU wheat imports this season.
French analysts Strategie Grains forecasts EU wheat imports of 4.2 million tonnes in the current 2012/13 season against 5.4 million in 2011/12. This includes a forecast rise in U.S. imports to 1.0 million tonnes from 936,000 tonnes and a fall in Ukrainian imports to 1.1 million tonnes from 1.8 million tonnes.
"The highly attractive price configuration for U.S. wheat which has developed in the past few weeks could cause observers to raise their EU import forecasts," a trader said. "British imports could be much higher than current forecasts after the terrible UK harvest in 2012."
One European trading house now forecasts British wheat imports from the EU and elsewhere this season at over 2.5 million tonnes, Saudi Arabia is forecast by analysts BMI to import 2.3 million tonnes this season.
"Most of the British imports are likely to come from inside the EU but some 317,000 tonnes of EU import wheat licences have been granted to Britain so it looks like third country imports to Britain could be more than expected," a trader said. "I think the British will revise their wheat import forecasts in the near future."