Wheat futures gained on speculation importers may take advantage of a two-day slump to meet domestic shortages, after prices plunged on concern protests in Egypt may cause imports to slow. Corn and soybeans also advanced.
March-delivery wheat rose as much as 1.3 percent to $8.365 a bushel on the Chicago Board of Trade, before trading at $8.3475 at 1:56 p.m. Singapore time. Futures slumped 3.6 percent in the two sessions through Jan. 28, on concern riots in Egypt, the world’s biggest wheat buyer, may disrupt deliveries.
The unrest in Egypt “should not be detrimental to agricultural commodities,” Michael Pitts, a commodity sales director at National Australia Bank Ltd., said by phone from Sydney today. “Egypt has consistently been buying over the last 12 months. They bought forward and they would have very small stocks.”
Internal delivery of wheat hasn’t been affected by the protests, Nomani Nomani, vice chairman of the General Authority for Supply Commodities, said last week. The nation has enough wheat to meet demand for six months, Nomani said. Jordan is tendering to buy 100,000 metric tons of wheat and 100,000 tons of barley, and bids will be accepted until Feb. 8, the government said last week.
As of Jan. 20, exporters from the U.S., the world’s biggest, have shipped 2.09 million tons of wheat to Egypt since the marketing year began June 1, the U.S. Department of Agriculture said Jan. 28. Egypt bought 540,500 tons of Australian wheat in the year to Sept. 30, according to Australian government data.
It could seek more this year because of reduced supplies from the Black Sea region, Tom Puddy, head of market at CBH Group, Western Australia’s largest shipper said.
Egypt was forecast to buy 9.8 million tons from overseas supplier this year, making it the world’s biggest buyer, according to the USDA.
Egyptian President Hosni Mubarak, a former air force commander facing unprecedented protests demanding his ouster, named Omar Suleiman, a former army general and head of the intelligence services, as vice president on Jan. 29. He also appointed Ahmed Shafik, a former air force commander, as prime minister, putting the top three government jobs in the hands of military men.
The army deployed across cities in Egypt after a night of looting and mayhem following the withdrawal of the police. More than 3,100 looters and escaped prisoners were arrested, state TV said. The week of protests left 150 dead and 4,000 wounded, Al Arabiya television cited a health official as saying.
Concern that imports may be disrupted “is a short-term issue,” Pitts said, as he explained that the nation’s declining supply will sustain its purchases.
Wheat futures will sustain gains as importers replenish stockpiles, Roy Huckaby, executive vice president at the broker Linn Group in Chicago said Jan. 28.
CBH Group is monitoring political unrest in Egypt amid concern that trade could be disrupted if turmoil in the country worsens, Puddy said.
“The problem will be if the financial markets really melt down in Egypt,” Puddy said. “Your number one priority, being an exporter, is security of payment.”
March-delivery corn advanced 0.9 percent to $6.495 a bushel on the Chicago Board of Trade, while soybeans for March delivery added 0.8 percent to $14.0875 a bushel.
Corn and soybeans may rise this week on improved demand for supplies from the U.S., the world’s biggest producer and exporter of both crops, according to traders and analysts surveyed by Bloomberg News from Tokyo to Chicago on Jan. 28.
To contact the reporter on this story: Luzi Ann Javier in Singapore at firstname.lastname@example.org
To contact the editor responsible for this story: James Poole at email@example.com