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Exports of French grain at risk of failure until railway workers stop striking

03.05.18
15:54

The continuing strikes of railway workers in France increasingly jeopardize the oversea shipments of grain. The protests against the government reform of the national SNCF railway company began on April 3 and were going to be held 2-3 days a week during three months until July. But for the time being it seems like the strikes will be finished on far much later date than July. If this does happen, the market will descend into chaos, since the harvest campaign usually starts in late June and rail transport is essential for smooth grain deliveries from fields to silos.

It should be noted that the lion’s share of grain is carried by wagons in France. This makes railways the most important link in oversea shipments. But at present, with railroads not working for several days a week, the operators switched to grain deliveries by trucks despite much longer transportation time and far higher costs. Firstly, three trucks are needed to carry the same volume of grain that used to be carried by one standard wagon. And secondly, the booming demand for trucks has boosted prices right to the sky. Back in April, the labor unrest mainly hurt the domestic market and they were producers who had to bear the expenses. At present, exporters are meeting with difficulties either. For example, they have to overcome many obstacles to have grain be delivered to ports and loaded on vessels. This is particularly true for loading operations in such giant ports as Rouen and La Pallice, where the stockpiles are almost exhausted and the volume of available grain is insufficient to carry out the forthcoming shipments. But no fresh grain cargos arrive.

At the same time, exporters have to reimburse demurrage caused by vessel downtimes. According to our sources, up to 160,860 t of grain are currently being loaded at the port of Rouen and almost 235,000 t are expected to be loaded in the near future. Nearly 110,280 t of grain are being loaded in the port of La Pallice and 175,800 t are waiting to be loaded soon.

It should be noted that despite rather sluggish demand for French wheat this year, the Algerian OAIC purchased pretty large volumes of French grain at the tenders, particularly with shipments from April to June. For example, it acquired almost 1.39 million tonnes of wheat with the delivery from April to June; the bulk of the scope of supply falls on the product sourced from France. According to official data covering the period from late March to early May, France supplies a total of 536,200 t of wheat to Algeria. Nearly 147,400 t of wheat were exported from Argentina from early March to early May, taking into account the delivery time of up to 19 days.

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