- Late Friday saw the results of the Egyptian tender, which raised some eyebrows in view of the size of the business transacted. A total of 535,000 mt saw 355,000 mt awarded to Russia, Ukraine and Romania (55,000 mt, 120,000 mt and 180,000 mt respectively) with the remaining 180,000 mt going to France. Unsurprisingly we have seen a degree of support in wheat markets following the tender although it remains unclear as to whether or not Egypt is now done for the season. Total Egyptian purchases (by GASC) this season have reach over 3.5 million mt, which compares with just under 3.5 million mt last year and over 5 million mt in 2011/12. It has been suggested previously that former President Morsi left office with wheat stock levels lower than desirable although we are unlikely to get formal confirmation of this. If that was to be the case, we could well see further tonnages being sought by Egypt in coming weeks. As always, time will tell.
- Weekend reports from Egypt state that stocks are sufficient to last until late April, and previously a six month wheat stockpile was stated to be the objective.
- Further reports from Reuters inform us that more corn rejections have occurred following discovery of the non-approved GM event, MIR 162, and the likelihood of further rejections appears to be on the cards. One of China’s “official” new agencies reports that over 600,000 mt of corn and products have been rejected by the nation. Weakness in China’s feed demand must surely be coincidental to the recent discoveries (or is that just a malicious thought on our part?).
- Extreme cold weather in the central US has raised fears of winterkill in wheat and farmer selling appears to be drying up quickly. Our belief, at present, is that this is likely to be limited and not a significant issue. In advance of this week’s USDA report the news, coupled with the Egyptian trade, has led front month CBOT wheat back over $6.00/bu; how long it stays there remains to be seen.
- S American weather remains kind with regular rains forecast across Argentina and S Brazil with a southern directional trend , which will favour the drier S Argentine crop regions.
- We still favour selling into rallies given our longer term view that global restocking is under way.