- Egypt, Algeria, Saudi Arabia buy through tenders in past week
- Prices rebounded from September lows amid Russian dryness
The wheat market is seeing a flurry of business, signaling buyers may be locking in supplies as concerns develop about Russia’s next crop.
Major importing countries including Egypt, Algeria and Saudi Arabia have all bought wheat in international tenders in the past week, lured by prices that are about 14 percent lower than at the start of the year. While record crops worldwide have meant bargain prices this year for buyers, wheat costs in Chicago, Paris and Russia’s port city of Novorossiysk have all increased from the lows reached in late August or early September.
Russia, set to overtake the U.S. and Canada this season as the world’s biggest wheat exporter, has seen less than 40 percent of the normal amount of rain in the past 30 days across large swathes of its central and western growing regions, World Ag Weather data show, and much of Ukraine is in similar shape. While Black Sea-region farmers are still planting crops for next year’s harvest, and there’s plenty of time for a recovery in moisture, the concern has been enough to bring some buyers to the market.
“We’ve just started to see some risks looming for the 2016 crops,” Benjamin Bodart, a director at CRM Agri-Commodities in Newmarket, England, said by phone on Monday. “We’re not anywhere near a tight supply situation, but probably some major importing countries just took the opportunity to book forward some commodities.”
Egypt, the world’s biggest wheat importer, bought 180,000 metric tons in a tender on Friday, with supplies coming from Russia and Romania. Algeria, the largest buyer from France, purchased at least 675,000 tons, Reuters reported, citing traders in Europe. Saudi Arabia’s state grains agency bought 740,000 tons of hard wheat, according to a statement on Monday.
Wheat prices on the Chicago Board of Trade, the global benchmark, traded at $5.075 a bushel by 7:05 a.m. local time on Tuesday, about 9.5 percent higher than a four-month low reached in early September. Futures on Euronext in Paris, which traded at the lowest in almost a year on Sept. 4, are up almost 9 percent since then, while Russian prices climbed 8.4 percent since late August, according to pricing from the Moscow-based Institute for Agricultural Market Studies.
Even though prices have rebounded from recent lows, there are still plenty of wheat supplies around to stave off a larger rally, Bodart said. Global wheat stockpiles this season will reach the largest on record, the U.S. Department of Agriculture estimates. Ample supplies will send the world’s food import bill this year to a five-year low, according to the United Nations’ Food & Agriculture Organization in Rome.
In other markets, corn for December delivery fell 0.4 percent to $3.7925 a bushel in Chicago while soybeans for November delivery increased 0.7 percent to $8.9375 a bushel. Soybean meal for December delivery gained 0.7 percent to $311.50 for 2,000 pounds.