PARIS- French wheat will need to be more price-competitive to win new export markets as Black Sea origins erode its traditional dominance in Algeria, crop merchant Olam International said on Friday.
Algeria has changed its tender terms in the past year to give access to Black Sea suppliers such as Russia and Ukraine, a shift exacerbated by a diplomatic row with Paris that resulted in the exclusion of French wheat in recent tenders.
While diplomatic tensions have eased, France is still expected to suffer a long-term loss of sales to Algeria, which typically brings in 6 million tonnes of milling wheat annually.
"What probably needs to happen ... is French (wheat) needs to get engaged in market share at the start of the year much more than usual," said Olam vice president and global grain analyst Fahad Vaipel.
Standard 11% protein French wheat is currently cheaper than Russian 12.5% protein crop for this summer, a reversal of the usual price pattern, suggesting the market is adapting to this export context, he told Agritel's Paris Grain Day conference.
France will need to chase more sales to Egypt and possibly in Asia, he added.
Traders are watching a tender being held by Egypt on Friday to see if France can clinch some fresh exports.
The European Union has also lost market share in Saudi Arabia after the country similarly facilitated access for Black Sea origins, Vaipel noted.
EU exporters may also have to grapple with a slowdown in global demand in the coming months as importers wait for new crop, currently much cheaper than 2021 harvest supplies.
When a similar price gap occurred between old-crop and new-crop wheat in recent years, wheat trade slowed by nearly 15% in the second half of the export season compared with the first half, Vaipel said.
However, any escalation in tensions between Russia and Ukraine could have a severe impact on the market, with the two countries' share of global wheat trade nearly double what it was when Russia seized Crimea from Ukraine in 2014, Vaipel added.
(Reporting by Gus Trompiz Editing by David Goodman) ((firstname.lastname@example.org; +33 1 49 49 52 18; Reuters Messaging: email@example.com))