- Saturday saw the announcement by Egypt’s GASC that they had secured 55,000 mt of US wheat in their latest tender for late October shipment, which elicited over 700,000 mt of offers between France, Russia and Romania. The price of the US wheat was reportedly $244.22 C&F, which compared with the cheapest French offer at around $5.50/mt more expensive on a like for like basis. Romanian and Russian offers were dearer still.
- There are a couple of possibilities which may arise from this latest tender, either we are beginning to see a bottom forming in this marketplace or Russian and French prices will push lower once again to restore their competitive status once again.Both countries have a big surplus to shift this season, and missing out on this latest tender means they will have bigger stocks in the second half of the season. Our current view is that we have not yet seen the season low in this market.
- Markets have started the week lower, once again, with Nov ’14 wheat in London breaking below the £110.00/mt level before staging something of a recovery into the close. Matif wheat also shed in excess of €2.00/mt and similarly closed off the lows of the session. Further contract lows have once again been a feature and weekend news of big harvest yields in the US has encouraged further selling.
- Technical support levels are difficult to calculate in these markets which are making fresh lows on a regular basis. Even the normally price savvy Chinese soybean buyers are staying relatively quiet particularly given their large volume purchases already on the books – at higher prices! Their economic outlook continues to lack sparkle and data confirms further slowdown, which could prove problematic on a more global scale in months to come – keep an eye on this one!
- Tomorrow could well give us a classic “Turnaround Tuesday” rally in prices given the level of decline that we have seen in recent days. Our view is that recovery, if any, will be limited as harvest is expanding in the US and rising freight and barge costs are pressuring cash prices lower, which will likely translate into futures markets.