January 25, 2010

Falling prices make French wheat more competitive than Russian wheat

French wheat has become more competitive against Russian wheat in recent weeks due to a fall in global prices, as various origins scramble to lure importers with cheaper offers amid ample supplies.

French wheat, which was being offered between US$195-$204/tonne in early November for December shipment, is now close to US$179-$182/tonne, FOB, for shipment in this quarter, said a senior executive at a global trading company.

For several weeks since late last year Russian offers for milling wheat were stuck at US$180-US$185/tonne, free-on-board, while futures markets tumbled, the executive said.

French wheat has followed the futures markets lower, also being dragged down by a weaker euro and has come close to the offers of Russian-origin this week. Even in mid-December French wheat was being offered around US$194/tonne.

Wheat futures on the Chicago Board of Trade have declined more than 6% in the last month and the March contract hit a session low of US$4.85 1/4 a bushel Wednesday (Jan 20), its lowest price since October 9.

French wheat is now pushing pressure on Russian offers and may push it to levels below US$175/tonne, said a Geneva-based trader.