Morocco chooses cheap Black Sea origins amid quality concerns for French wheat

Morocco, expected to see a surge in wheat imports to a record high in the current marketing year as the protracted drought has hit domestic production, has been favoring cheaper Black Sea origins amid concern over the quality of the French crop.

Morocco typically relies on imports from Europe, notably France, to make up for poor harvests. Imports from France in the marketing year 2023-24 (July-June) reached 2.2 million metric tons, compared with a total of295,178 metric tons from Russia and Ukraine, according to S&P Global Commodities at Sea(opens in a new tab) data.

With Morocco's wheat production forecast at just2.5 MMt for MY 2024-25, down 1.6 MMt year on year, it was expected to increase imports by 1.5 MMt to a record 7.5 MMt in MY 2024-25, according to US Department of Agriculture estimates.

However, the increased demand for imports comes at a time when the French wheat harvest, which starts in late June, has been disrupted by excessive rain, also leading to poor wheat yields and quality.

France's total wheat production is forecast at 29.1 MMt, according to S&P Global Commodity Insights, down from 36.2 MMt in MY 2023-24.

Only 48% of France's soft wheat was in good or excellent shape -- the lowest levels since 2016, farm office FranceAgrimer said Aug. 5.

As a result, Moroccan buyers have been opting for low-priced Black Sea wheat over high-priced French wheat. Platts assessed FOB 12.5% Russian wheat at $221 per metric ton on Aug. 12, down 4.7% since late June.

CPT Rouen France 11.0% was assessed at $230.25/t on Aug. 12, with FOB Rouen valued at around $237/t.

"We won't see much business in the short term," a French trader said, highlighting the low French production and limited export volumes to North Africa as a result.

In July, Morocco purchased far more wheat from the Black Sea than France, reversing the trend of last year. That included 145,316 t of Russian wheat and 33,631 t of Ukrainian wheat, according to CAS. Imports from France totaled 127,327 t.

In July 2023, imports from France reached 285,420 t, compared to Russia's imports at 25,533 t and zero from Ukraine, according to CAS.

"A Russian ship of 33,000 t of wheat has just arrived, there should be others arriving mid-August that were loaded in July," another local trader said.

Traders in Morocco said they usually opted more for French wheat due to difficulties securing insurance from Moroccan banks for vessels shipping from the Black Sea because of war concerns following Russia's invasion of Ukraine in 2022.

"Last year Moroccan banks compliance refused to process a lot of vessel documents from there," a Morocco-based trader said. That issue has eased somewhat, the trader said, contributing to more cheap flows out of the region.

"We got a lot of hassle a few weeks ago before they accepted to insure a vessel from Odessa port," the trader said.

"There are no problems with Russian ships rather France's high prices and quality problems," another local source said.

In the MY 2024-25, Russian wheat production is forecast at 82 MMt, with exports at 44 MMt, as harvest reports indicate better-than-expected winter crop yields, according to Commodity Insights analysts.