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French wheat stocks still seen at 17-year high in gloomy market

PARIS - Farm office FranceAgriMer on Wednesday left unchanged its forecast for French soft wheat stocks at a 17-year high, seeing little scope for the stockpile to shrink unless the euro slides and boosts exports in a well-supplied world market.

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PARIS - Farm office FranceAgriMer on Wednesday left unchanged its forecast for French soft wheat stocks at a 17-year high, seeing little scope for the stockpile to shrink unless the euro slides and boosts exports in a well-supplied world market.

The office kept its outlook for French soft wheat stocks at the end of the 2015/16 season on June 30 at 6.0 million metric tons, as it also held its forecast of soft wheat exports outside the European Union at 11.0 million metric tons.

The unchanged export outlook took into account reduced trade with Egypt amid a recent controversy over import terms and strong demand from Morocco as the country responds to expectations of a poor local harvest following drought.

Projected exports would be down from 11.4 million metric tons in 2014/15 and insufficient to absorb record wheat production in 2015/16, FranceAgriMer officials said.

"As of today we can't see the skies clearing," Olivia Le Lamer, head of the office's grains unit, said regarding wheat.

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"There is no reason for demand to catch fire, so we're more and more dependent on exchange rates in order to capture any export demand," she told reporters.

France, the EU's biggest wheat grower and exporter, has been battling for overseas sales against rival suppliers such as Russia, Ukraine and Argentina in a world market estimated to have record supplies this season.

A weaker euro makes French grain cheaper on dollar-priced export markets.

Thursday's policy meeting of the European Central Bank could be significant for exporters if any fresh stimulus measures trigger a drop in the euro, Le Lamer said.

French soft wheat exports between July and February were just ahead of last season's pace, with about 6.8 million metric tons shipped, FranceAgriMer said.

But full-year exports were still expected to fall short of the total in 2014/15, when France saw strong sales to Asia and continued demand from Egypt in the latter part of the season.

In its monthly supply-and-demand outlook for cereals, FranceAgriMer cut its projection for 2015/16 barley stocks to 1.6 million metric tons from 1.75 million. That was chiefly due to a 200,000-metric ton rise in its estimate for exports outside the EU, now seen at 4.1 million metric tons.

The improved barley export outlook was mainly due to Morocco as the drought there raised demand for feed grains, Le Lamer said.

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FranceAgriMer lowered its maize stocks estimate to 2.6 million metric tons from 2.7 million, reflecting higher exports within and outside the 28-member bloc.

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