Egypt, the world’s top wheat importer, paid more for wheat at its second tender of the season – defying discounting by many merchants which appeared to underline a shift eastwards in the focus of export competition.
Gasc, the Egyptian grain authority, over the weekend bought 300,000 tonnes of Romanian and Russian wheat at tender, adding to the Black Sea supplies ordered on Tuesday to take total purchases for 2016-17 to 480,000 tonnes.
The purchase price of the wheat bought at the weekend, at $174.99 a tonne including shipping ($167.13 a tonne excluding shipping), was nearly $2 a tonne above the price Gasc paid on Tuesday.
“Operators have noticed that prices were up compared to previous tender,” said Agritel, the Paris-based consultancy.
‘No bargain basement offers’
However, there were also some doubts that the rise in prices, which contrasted with a small fall in Chicago and Paris wheat futures over the same period, was representative of underlying market trends.
In fact, of the 12 merchants which offered wheat to both tenders, eight dropped their prices for the weekend event, with Romanian supplies particularly discounted.
Cerealcom Dolj, a Romania-based grain grower as well as trader, slashed its price of domestic supplies by $6 a tonne to win part of the Gasc order, with Ameropa and Louis Dreyfus Commodities also cutting prices for Romanian cargos.
“Take the average price of all the offers at the weekend, and it is probably lower than it was on Tuesday,” a UK-based grain trader told Agrimoney.com,
“What you did not have at the weekend is the bargain basement offers that allowed Gasc to buy so cheaply last time, but which may not be repeated now traders have a better idea of the prices elsewhere in the market.
“It is certainly too early just from the two Gasc tenders we have had so far to believe that wheat export prices are trending upwards a bit.”
Romania vs France
Indeed, the declining price of Romanian offers tallies with stronger ideas for the harvest in the eastern European Union producer – contrasting with the waning expectations for output in rain-battered countries further west in particular France, the bloc’s top wheat grower, but also second-ranked Germany.
Strategie Grains last week, cutting its forecast for EU soft wheat output by 1.2m tonnes to 145.5m tonnes, downgraded crops in the likes of France, outweighing a combined 1.5m-tonne upgrade to harvest expectations for Romania, Bulgaria, Hungary, Slovakia, the Czech Republic, Italy and Greece.
ODA last week cut its forecast for French production to 32m tonnes – a drop of 22% from last year, when the country achieved its first 40m-tonne harvest, while officials at FranceAgriMer on Friday rated the domestic crop at 49% good or excellent, down 10 points week on week and 27 points year on year.
By contrast, Coceral has forecast a rise of 600,000 tonnes to a record 8.16m tonnes in Romania’s output this year, while Agritel has put the harvest at 8.28m tonnes, saying that a “mild winter and wet spring have supported record yield potential” of more than 4 tonnes per hectare.
Indeed, with Russia also set for a record harvest, and Ukraine for strong production, attention in the grain export trade looks set to shift even further east than has become the norm.
“The Black Sea looks like it is going to be the first port of call for more and more buyers,” the UK trader said.
The US Department of Agriculture, in a report late last week, after it upgraded by 1.0m tonnes to a record 65.0m tonnes its forecast for the Russian wheat harvest, flagged the prospect of a yield of 2.5 tonnes per hectare, matching the all-time high, on top of increased sowings.
“Conditions for winter wheat in the Central, Southern, North Caucasus, and Volga Districts of Russia have been excellent throughout the growing season, and early-season conditions for spring wheat in the Siberian, Ural, and Volga Districts have been favourable as well.”
(Source – http://www.agrimoney.com/news/egypt-pays-more-for-wheat—but-will-the-price-rises-last–9752.html)