- Egypt has once again ventured into the wheat market, this time securing 240,000 mt for shipment in the first ten days of March, of which Russia secured the lion’s share with 180,000 mt, the remaining 60,000 mt being awarded to the US. This brings January purchases to a total of 1.13 million mt, prices on this occasion appear to have been below $300/mt basis C&F reflecting cheaper levels in the face of higher confidence in global supplies. Additionally, the switch back to corn feeding in the US, away from wheat, and the move in Europe towards cheaper corn and away from wheat, leaves more wheat available to meet international trade demand – at cheaper levels.
- It is probably fair to say that the Russian supply was unexpected, with many (including ourselves) believing their early season export pace would have left them all but done by now. Perhaps the surprise was the additional supply criteria, limiting the moisture content to max 13%, which has left EU suppliers and notably France, where 13.5% is the norm, out in the cold. Clearly, Egypt’s GASC is getting somewhat confident in its ability to source supplies. MATIF wheat ended the day lower with Chicago trading slightly higher an hour before the close.
- We would expect to see further Egyptian purchases before they shut up shop in advance of its own harvest.
- We have previously referred to cold conditions affecting northern Europe and Baltic States and these have moved to Poland, eastern Germany and Sweden with temperatures dropping to –20 ℃ (-4℉) in Latvia, -18℃ (0℉) in Poland and -13℃ (8℉) in eastern Germany. Limited snow cover across the Baltic States, less than 1 cm, leaves some degree of winterkill likely despite the wheat crop being at its least vulnerable growth point.
- Despite the localised cold weather it is difficult to envisage sufficient damage to sustain anything of a long term price rally in wheat. Old crop supplies appear plentiful (see comments above) and new crop prospects continue to look favourable. Just one example would be India who is staring at what many are calling a 100 million mt wheat crop, due to be harvested in less than two months, following on from what appear to be plentiful old crop stocks. We would be averse to long wheat positions right now.