Glencore Said to Ship Rare French Wheat Cargo to Feed U.S. Herds

  • Glencore shipment heading to Wilmington, North Carolina: port
  • Deal probably done earlier this year when arbitrage narrowed

Swiss commodities trader Glencore Plc is shipping a cargo of French wheat to the U.S., one of the world’s largest exporters, in a rare move seen only one other time in the past 13 years.

Vessel Union Erwin loaded soft wheat at the French port of Rouen last week and is now heading to Wilmington, North Carolina, said Manuel Gaborieau, who’s responsible for grains traffic at the harbor. The ship was chartered by Glencore to carry 45,000 metric tons of the grain, according to a ship lineup obtained by Bloomberg.

The deal was probably done earlier this year, when the price gap between French and U.S. wheat was narrower, Matt Ammerman, a commodity risk manager at INTL FCStone Inc., said. The U.S. last imported French wheat two years ago and in 2002, data from the country’s Department of Agriculture showed.

Voyage history of Union Erwin over the past 28 days.

French milling wheat futures on the Euronext exchange in Paris were about 27 euros ($30) a ton more expensive than U.S. grain traded on the Chicago Board of Trade, exchange data compiled by Bloomberg showed. That reverses a discount in March and compares with a premium of as low as 7 euros in June. The so-called arbitrage widened later in the year as a deluge hit the crop in France.

A spokesman for Glencore declined to comment.

The Union Erwin vessel left Rouen carrying 32,183 tons of wheat. It then stopped at the French port of Dunkirk, where it probably loaded more grain, Gaborieau said. Because the draft is shallower in Rouen, large vessels usually pick up some grain there before heading to Dunkirk to finish loading.

The grain will probably be supplied to livestock producers in North Carolina, Ammerman said. Livestock producers typically ship in feed by rail from the Midwest, as the region is a “grain deficit” area, according to Will Sawyer, an Atlanta-based vice president of animal-protein research for Rabobank International.

As the number “of animals to feed continues to rise, the necessity to find alternative sources for grain outside of just the domestic supply makes something like importing grain that much more desirable," he said.

Freight from U.S. wheat areas to North Carolina can be expensive as rail companies tend to prioritize cargoes such as coal and oil, said Michael McDougall, a senior director at Societe Generale SA in New York. They also tend to favor deliveries to the country’s main export hubs in the Gulf and Pacific Northwest, leaving the "door open" to cargoes of wheat from France, corn from Brazil and soybean meal from Argentina, he said.

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